Red Sea crisis on shipping costs, rates 'dramatic': UN

By Diyar Guldogan

WASHINGTON (AA) - An official from the UN Conference on Trade and Development (UNCTAD) on Thursday warned against the negative impacts of the ongoing crisis in the Red Sea on global trade.

"We are very concerned that the attacks on Red Sea shipping are adding tensions, costs to global trade ...," Jan Hoffmann, chief of UNCTAD Trade Facilitation Section, told reporters virtually.

Hoffmann said three key global trade routes, including Ukraine and Panama Canal, were disrupted.

"And on top of all this, now we have the Red Sea crisis," he added.

Red Sea route and the Suez Canal are "critical" for global trade flows, he said, adding: "Suez Canal handles approximately 12% to 15% of global trade. For container shipping, it's even more important 20% of the world's container trade goes through the Suez Canal."

He stressed that the impact of the Red Sea crisis on shipping costs and rates "now has been dramatic."

The average container shipping spot rates from Shanghai went up 122% since early December, more than doubled, and the rates from Shanghai to Europe went up by 256%, more than tripled, he said.

"We see the global impact of the crisis as ships are seeking alternative routes, avoiding the Suez and Panama Canal."

The UNCTAD remains concerned and will continue to monitor the impact of the disruptions, Hoffmann said.

Tensions have escalated in the Red Sea due to Houthi attacks on Israel-bound ships.

The Houthis say the attacks aim to pressure Israel to halt its onslaught on the Gaza Strip, which has killed nearly 26,000 people and led to a humanitarian catastrophe. That has prompted the US and Britain to launch retaliatory airstrikes against Houthi targets inside Yemen.

The Red Sea is one of the world's most frequently used sea routes for oil and fuel shipments.