Drewry: One-Third of Global Container Shipping Capacity Impacted by Red Sea Crisis

The international container shipping faces a critical couple of weeks as ongoing attacks and reroutings in the Red Sea continue to impact the sector ahead of the Chinese New Year period.

According to Philip Damas, head of Drewry Supply Chain Advisors, the next 4-5 weeks will be crucial for global shipping and container traffic particularly between Asia and Europe as well as the Mediterranean.

Drewry estimates that more than 800 ships representing about 10 million twenty-foot equivalent units (TEUs), or approximately one-third of the world’s container ship capacity, is affected by the Red Sea attacks and reroutings around the Cape of Good Hope.

While there are concerns about how this disruption will impact the pre-Chinese New Year “rush”, Drewry believes that there is enough capacity available in the market to absorb much of the impact—at least for now.

Philip Damas stated, “Any disruption before Chinese New Year is always a concern for shippers. Although the current situation is already causing bottlenecks in global supply chains, we believe that there is sufficient capacity to handle the resulting congestion, equipment shortages, and schedule gaps.”

However, Damas said Asia to Europe capacity is currently “very limited” and there is even less capacity to the Red Sea from Asia, Europe, or the U.S. “The is something of panic in China right now about the availability of capacity,” he said.

“It should be noted, however, that container equipment is likely to remain displaced for several weeks, which will affect service schedules and create inflationary headwinds. There is limited flexibility to mitigate any escalation in the regional security situation,” added Damas.

Over the weekend, Ryan Peterson, founder and CEO at Flexport, said about 95% of the containerships that normally transit the Red Sea and Suez Canal are rerouting around the tip of South Africa.

You can watch Drewry’s Red Sea crisis impact assessment here.

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