(Finance) – The reduction of shipments through the Red Sea and alternative routes around Africa following attacks on commercial shipping led to the redistribution of volumes from ports in the affected area to terminals in the United Arab Emirates and Africa. Fitch Ratings states this in a report on the topic, explaining that the larger operators with geographically diversified portfolios are less affected compared to single-asset regional operators, who may suffer volume losses due to reduced services caused by disruptions.
Diversions and decreased shipping capacity between Europe and the Far East are leading to volume losses for ports on the Red Sea coast and near the Suez Canal, and creating congestion at terminals along alternative routes. Particularly affected are the transhipment volumes of port operators in Egypt, Saudi Arabia and Turkeywhile origin and destination (O&D) shipments are more stable.
“The extent of shipping disruptions is lower and more localized than that observed during the pandemicwhen port congestions were widespread globally, while the demand for goods was very high – we read in the report – We believe that the interruptions will be temporary, as the importance of the Red Sea trade route is recognized globally and a US-led coalition is seeking to establish safe transit for commercial ships in the area. However, a period of prolonged disruptions, which is not our base case, could lead to greater supply chain pressures and more severe operational consequences. This may require adjustments by port operators, including changes in capital expenditure, depending on location.”
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