What's Going on with Shipping: Red Sea and Global Implications - Hosted by Sal M. Kagano

Introduction

• Weekly long form episode focusing on global shipping issues
• Main Focus: Situation in the Red Sea and its global implications

Overview

• Affects everyone involved in global shipping (consumers, shippers, etc.)
• Examines five major stories:
  1. Update on the Red Sea Situation
  2. Diversions
  3. Role of the Panama Canal
  4. Costs
  5. Smaller Issues Impacting Global Shipping

Marine Traffic Analysis

• Uses Marine Traffic app for AIS (Automated Information System)
• Image Breakdown:
  • Cargo ships (green) and tankers (red) over 10,000 gross tons
  • Key routes and diversions visible
• Highlights of Major Routes:
  • East Asia -> South China Sea -> Straits of Singapore -> Straits of Malacca -> Branch to South Africa, Persian Gulf, Persian Gulf of Aden, and Suez Canal
  • Container ships mainly divert around the southern tip of Africa

Story #1: Update on the Red Sea Conflict

• Attacks on ships by Houthis
• Recent Israeli-linked vessel struck by drone
• Iran's support for Houthis
• CNN and Reuters coverage on Iran-Houthi connection
• France's independent naval escort operation
• Operation Prosperity Guardian led by US, concerns from other countries
• Briefing on US Naval presence and strategies
• The inconclusive support from allies for US-led operations
• Long-term sustainability of US Naval presence

Story #2: Diversions

• Ships still transiting through Suez but in lower numbers
• High-priority shipments still using Suez but with extra security
• Major container lines planning diversions around Africa
• Maersk announces diversions till February
• Search charges and increased fuel costs
• Impact on shipping schedules and carbon emissions

Story #3: Role of Canals

• Ever Given incident in Suez as a reference point
• Impact and expansions of the Suez Canal
• Low water levels in Panama Canal leading to reductions in transits
• Panama Canal Solutions and Implications:
  • Reduced daily slots and increased charges

Story #4: Costs

• Increased War Risk Insurance affecting routes
• Rising ship charter rates
• Unexpected costs being passed to shippers and eventually consumers
• Potential for exacerbated financial issues with tankers and bulkers

Story #5: Additional Issues Impacting Global Shipping

• Misallocation of empty containers
• Overwhelmed African ports
• Increased fuel costs in alternative ports such as Durban
• Potential shifting of cargo to air freight and rail alternatives
• Longer-term geopolitical implications and reordering of global shipping routes

Conclusion

• Emphasis on the widespread implications, including inflation
• Attention to future naval operations and geopolitical stability
• Encouragement to support the channel and awareness of potential future disruptions