On January 19, armed Houthi rebels seized the car carrier “Galaxy Leader” on the coast of Al Salif, Yemen, marking a significant escalation in the ongoing conflict in the region. The incident has had far-reaching implications, particularly for global shipping routes and costs. On February 5, the rebels were seen disembarking from a small boat on the same coast, with the Galaxy Leader in the background, further highlighting the precarious situation.

The geopolitical instability in Yemen, especially involving the Houthi rebels, has long been a source of concern for global maritime trade. The Red Sea, and specifically the Bab el-Mandeb Strait, is a critical chokepoint for shipping routes between Europe and Asia. The seizure of the Galaxy Leader underscores the vulnerability of these routes to regional conflicts and security threats.

In the months following the seizure, the impact on shipping costs has been profound. In May, shipping costs for sea exports from South Korea to the European Union (EU) increased by 8.1%. This trend continued in June with a 44.6% rise, and by July, costs had surged nearly 40% compared to the previous month. According to the Korea Customs Service’s “Status of Export and Import Transportation Costs for July 2024,” the average shipping cost per 2TEU for sea exports from Korea to the EU last month was 8,086,000 won (approximately $5,989).

The increase in shipping costs is not limited to the EU. Last month, costs also rose for routes to the Eastern U.S. (28.1%), Western U.S. (20.0%), Vietnam (56.0%), China (27.2%), and Japan (1.5%). The Western U.S. route has seen rising costs for four consecutive months, reflecting broader disruptions in global shipping.

The surge in shipping costs can be attributed to several factors, including increased cargo volume from China, particularly affecting routes to Vietnam. The geopolitical risks in the Red Sea region have also led to rerouting and heightened security measures, further driving up costs.

Conversely, the average shipping cost for sea imports from the EU to Korea in July was 1,617,000 won, a 7.9% decrease from the previous month. However, costs for sea imports from the Eastern U.S. (3.5%), China (12.8%), and Vietnam (62.7%) increased. Air import shipping costs also rose for the EU (18.1%), China (3.0%), and Vietnam (4.4%), while they decreased for the U.S. (-1.1%) and Japan (-3.2%).

Source : Businesskorea