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Conflict in Red Sea Forces Suez Diversions, Adds Uncertainty to Disrupted Market

Suez and Panama Canal Disruptions Force Cape of Good Hope Routings, Extending Transits by Weeks

Responding to recent attacks on cargo vessels in the Red Sea, a growing number of shipping companies have halted services through the Suez Canal and begun routing vessels around Africa's Cape of Good Hope. Last week, Houthi Rebels attacked three container vessels in separate incidents in the Bab-el-Mandab Strait, causing carriers Maersk and Hapag Lloyd to immediately pause and ultimately re-route all services through the area. CMA and Zim quickly followed suit.

Trade routes around the Cape of Good Hope may be safer, but transit times are increased significantly, adding at least 14 days on Asia-US East Coast lanes.

The increased geo-political conflict around the Suez Canal only exacerbates an already challenging environment for service routes. Drought conditions affecting the Panama Canal are expected to persist well into 2024, and vessel draught restrictions have tightened, allowing only a few vessels to transit the canal per day. Persistent long delays will effectively remove vessels from steady rotation, decreasing available space, and will ultimately drive freight rates upward.

O.T.S. is committed to providing exceptional service and will continue to monitor these challenges as they develop. Please do not hesitate to reach out to your OTS Sales Representative with any questions.