Stuck in The Throat of The Sea Route, The Houthi Armed Forces Frequently Attack Israeli-related Merchant Ships! It Has Affected The Shipping Market, And Some Shipowners Have Levied Relevant Surcharges

Recently, the Houthi armed forces in Yemen have frequently attacked merchant ships bound for Israel. Many analysts told reporters from the Associated Press that the overall impact is limited, but it may increase war surcharges and other related costs. Currently, ZIM (ZIM.US) and Maersk have announced the imposition of relevant fees.

Reporters from the Financial Associated Press learned that the merchant ships currently under attack include car carriers operated by Japan's NYK and container ships operated by OOCL, a subsidiary of Orient Overseas International (00316.HK). On the 12th local time, the Houthi armed forces in Yemen also stated that they launched a missile at the Norwegian oil tanker "Strinda" and hit it.

At the same time, the Israeli military announced that it would send frigates to the Red Sea to deal with the Houthi armed forces in Yemen. Despite this, the attacks by Yemen’s Houthi armed forces have not stopped. In this regard, some analysts told reporters from the Financial Associated Press that from the perspective of global maritime trade, Israel's maritime trade is mainly imported. The main imported commodities include crude oil, refined oil, coal and other raw materials, accounting for about 0.3 of global seaborne imports. %, the magnitude is very small. "Although the Red Sea is close to the Suez Canal fortress, the Houthi armed forces are currently only attacking Israeli ships or related ships transporting Israeli goods. Others are normal and the overall impact is limited."

Among the major liner companies, the one that will be directly affected is obviously the Israeli liner company ZIM. However, its official website states that the company's business and services in various places (including to and from Israel) are continuing uninterrupted. The company has also implemented temporary proactive measures to ensure the safety of its crew, vessels and customer cargo, including changing some routes. Based on this, ZIM also announced on the 13th Beijing time that it would update the freight rates for the Asia-Mediterranean (ZMP) route due to increased operating costs.

However, judging from the freight performance of the entire container shipping market, the current increase in the freight index on the European route is still mainly due to liner companies raising freight rates and sufficient overlapping cargo volume. The Shanghai Export Container Settlement Freight Index (SCFIS) for European routes released this week increased by 24.8% month-on-month to 939.57 points, which was mainly the first round of price increases that completely covered December.

In addition, during the Palestinian-Israeli conflict, the most intuitive cost change in the global shipping market is the possible increase in related costs such as War Risk Surcharge (WRS).

Wang Keqiang, a researcher at the Investment Consulting Department of Haitong Futures, said that when ships pass through these (high-risk) areas, insurance companies will charge additional insurance premiums, and shipping companies will usually pass on these additional costs to cargo owners in the form of war surcharges. The specific costs refer to the conflict in the Middle East that broke out in the second quarter of 2019. At that time, CMA CGM, Mediterranean Shipping Co., Ltd., etc. levied WRS 35-45 US dollars/TEU on all goods entering and exiting the Arabian Gulf. COSCO Shipping Lines, a subsidiary of COSCO SHIPPING Holdings (601919.SH), imposed a levy on Persia The Gulf route from mainland China to the Persian Gulf region is charged WRS 50 USD/TEU. As for whether the relevant Israeli ships have diverted, Wang Keqiang believes that the impact will be limited.

A reporter from the Associated Press learned that ZIM has begun to levy additional War Risk Premium (WRP) surcharges on routes calling at Israeli ports, with prices ranging from US$25/TEU to US$100/TEU (prices vary for different routes) ); Maersk will also levy an Emergency Risk Surcharge (ERS) on cargo unloaded at Israeli ports starting from January 8 next year, with standards of US$50/TEU and US$100/FEU (including 45-foot containers).

In terms of the tanker market, the aforementioned analysts said that the impact of the Palestinian-Israeli conflict is not as severe as the OPEC+ production cuts.

Just at the end of November, OPEC+ decided to start cutting oil production by nearly 2.2 million barrels per day in the first quarter of 2024, including the 1 million barrels per day cut already implemented by Saudi Arabia and the 300,000 barrels per day cut by Russia. Drewry said this could further reduce tanker freight rates, which are already suffering from weak demand.