The dry bulk freight sector is expected to be less impacted by ongoing Houthi attacks on commercial vessels in the Red Sea, according to freight sources quoted by AgriCensus.
Since the end of last year, the Yemen-based Houthi movement had been launching missile strikes on vessels heading to the Suez Canal in retaliation for Israel’s attacks on Gaza, leading some leading freight operators and major companies to review their operations and transit plans for the region, the 2 February report said.
At the time of the report, more than 24 vessels had been struck by Houthi missile attacks in the Red Sea, leading to US and British strikes against Yemen and a naval force sailing into the Red Sea.
Despite severe disruption for containers and oil tankers, the ongoing crisis had not had a serious impact on the bulk market and was unlikely to do so, the sources said.
This was partly due to fewer dry bulk cargoes relying on the Suez Canal for transit, leading to less re-routing.
According to one source, only 4.5% of the global bulk trade passes through the canal annually.
Suez Canal Authority data for 2019 showed that the bulk sector represented only 13.2% of all tonnage that passed through the canal and 22.5% of all ships for that whole year.
Daily bulker transits through the Suez Canal fell 19% from 24 December to 23 January, compared to a 55% fall in container transits, according to recent index data from the United Nations Conference on Trade and Development (UNCTAD).
One contributing factor to the discrepancy could be that a larger proportion of dry bulk shipping could be considered safer as it was not linked to Israeli or American allied countries whom the Houthis had said they would target, AgriCensus wrote.
“Since a large part of the Suez bulker traffic would be Russian cargo ex-Black Sea – which are less affected generally for political reasons – this is another reason why dry bulk is less affected than some of the other segments,” Roar Adland of SSY told AgriCensus.
However, some dry bulk commodities had been more adversely affected than others, with XClusiv Shipbrokers estimating that out of 7.7M tonnes/year of grain cargo using the Suez Canal, 3.9M tonnes had been shipped via alternative routes.
According to sources, the situation could also be a problem for US-based cargoes, with some US Gulf exporters using the Suez route to access Asian markets to avoid delays at the Panama Canal.
