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What will be the impact of the Red Sea incident on transportation costs?

A ship carrying steel coils to a number of Turkish buyers operated by Korean steelmaker Posco through its trading company Samsung has been hijacked by pirates off the coast of Somalia. This situation led to the halt of passages in the Suez Canal, which provides 12% of global trade.

What will be the impact of the Red Sea incident on transportation costs?

The attacks of Iran-backed Houthis in Yemen against commercial ships passing through the Suez Canal and calling at Israel also affected Türkiye. Houthis' attacks on ships sailing in the Red Sea led to the halt of passages in the Suez Canal, which provides 12% of global trade. This situation caused many international transport companies to change the route to the Cape of Good Hope, increasing voyage times from 9 to 30 days and increasing transportation costs by 60%.

Some sources said that although dry cargo ships that concern Türkiye continue to use the Suez Canal, large container ships that really affect Turkish foreign trade should not enter Suez in order not to risk their personnel, which will cause transportation costs to increase by 20-60 percent in a week.

"Transportation cost increased to 2 thousand dollars"

Sources said that the cost of empty containers going from Istanbul to the Far East increased from 500 to 800 dollars, and noted that the transportation cost of containers coming from China to Türkiye increased to 2 thousand dollars, and that imports from the Far East would be negatively affected in particular.

“There will be a rapid increase in container prices”

Mustafa Gültepe, President of the Turkish Exporters' Assembly, said that there was an atmosphere of panic as a result of the attacks and the decisions taken by the transportation companies and said, "In the first place, there was a rapid increase in the prices of containers going to the Far East. There is an average cost increase of 2 times. Experts state that the cost per FEU may rise to 4 thousand dollars. But these are possibilities for now.” said.

Comments

1 comments
Increased logistic costs will make the material less viable

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