Red sea shipping disrupted by militant attacks
USAgNet - 01/10/2024
Recent militant attacks in the Red Sea have led to the suspension of shipments by the world's second-largest shipping company. These attacks, attributed to Houthi militants, are having far-reaching consequences on global trade and shipping routes.
The Red Sea serves as a crucial trade route, with approximately 15 percent of world trade passing through it, including about eight percent of grain trade. The attacks have prompted many exporters to seek alternative, safer routes, with the Suez Canal being the most cost-effective way to transport goods between Eastern Asia, Europe, and parts of the Middle East.
However, diverting around the troubled area means adding at least ten extra days to shipping routes. This results in increased expenses for crew wages, fuel, and general delays for buyers, particularly affecting perishable food products. Additionally, ships are not returning as swiftly as before, reducing the overall capacity of the global shipping systems.
While the current impact on farmers may be limited, long-term disruptions in Red Sea shipping could affect U.S. agricultural exports. Already, surcharges have been imposed on many agricultural exporters without the mandated 30-day notice from the Federal Maritime Commission. This could soon lead to challenges for farmers who export goods to these regions.
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