It has been impossible to start the new year from scratch because the world is still under political pressure, which could result in new and more significant conflicts.
In this regard, the activities in the Red Sea are especially important. The creation of a naval power to guard the area’s boats appeared to improve the condition, but it did not. Houthi ballistic-missile attacks on boats in the Red Sea remain, obstructing the safe movement of goods through the Suez Canal and the Bab-el-Mandeb Strait.
As a result, delivery companies are being forced to find alternative routes in order to protect their employees and cargo, which, predictably, results in more time and money.
The results are already clear: According to Freightos, a system for booking and payment for international transport, costs from Asia to Northern Europe have more than doubled to over US$ 4, 000 per 40-foot vessel, while they have increased to$ 5, 175.
Shipping costs from Asia to North America’s eastern coast increased by 55 % to$ 3,900 per 40-foot box. West coast rates increased by 63 % to more than$ 2,700.
This is not because businesses decided to arbitrarily raise prices and take advantage of the situation, but rather because it would cost up to$ 1 million more to divert ships through the southernmost point of Africa.
The good news is that costs from Asia to Northern Europe and the Mediterranean are still significantly lower than the pandemic-driven 2021 report spikes of$ 14, 000 per 40-foot box.
Of course, this does not imply that the possibility of an increase in inflation is unimportant, but at least there is some hope that price growth wo n’t be as severe.
But what if the position in the area continues to deteriorate?
Let’s start by stating that, at least based on Irans ‘ reluctance to engage in direct conflict with the US and Israel, the likelihood of such a circumstance remains lower for the time being.
However, it is very possible that transportation prices will increase more, upsetting the plans of central banks, if Houthi attacks and piracy in the Red Sea remain.
Regulators will likely be forced to delay a change in economic policy, which will put pressure on the world economy and worsen market sentiment, to be more accurate.
Who stands to gain from this conflict, exactly?
Second, there are the freight firms, whose stock prices have already increased. Next, a volume move toward sea-air services or airfreight alternatives may result from delays in sea transportation.
Additionally, oil and gold prices may increase as a result of supply constraints and, of course, higher transportation costs, as well as increased confusion.