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Grain and oilseed shipments transported via the Suez Canal in December dropped by 20% compared to the previous month, World Grain reported an International Grains Council (IGC) analyst as saying.

Citing private, real-time shipping data, IGC senior economist Alexander Karavaytsev said volumes were well below the same month in 2022 and the three-year average.

The drop in shipments came against a backdrop of ongoing drone and missile attacks on shipping vessels in the Red Sea by Yemen-based Houthi rebels, which had started to significantly impact dry bulk shipments, including grain, after being mainly limited to the container segment during the first stages of the crisis, the 25 January report said.

The Houthis have been attacking vessels in the region since late October, shortly after Hamas’ attack on Israel, which provoked an Israeli counterattack on the Gaza Strip, where Hamas is based. The Houthis claim that their attacks on the Red Sea are in response to Israel’s counteroffensive.

As a result of the attacks, the situation had led ships transporting bulk commodities, such as grain, to divert deliveries away from the Suez Canal, Karavaytsev said.

Several of the world’s largest shipping firms — including Maersk, Hapag-Lloyd, and the Mediterranean Shipping Co — had suspended shipping through the Suez Canal, a move that added to the journey and increased costs, World Grain wrote.

According to IGC estimates, re-routing from the EU and the Black Sea countries via the Cape of Good Hope at the southern tip of Africa “adds around 10 to 15 days to the journey time and around US$6-US$8/tonne to freight costs.”

Additional costs were directly linked to marine fuel prices, which accounted for about 20% of total voyage expenses, which – in turn – were linked to crude oil prices, Karavaytsev said.

With reports of rising demand for marine fuel at ports around Africa, the resulting increase in fuel prices will add to higher freight costs on the alternate routes, according to Karavaytsev.

“This could push importers in Asia and parts of Africa to look for alternatives offering shorter delivery times and also exert downward pressure on fob prices in the EU, Russia and Ukraine,” he added.

Meanwhile, the Panama Canal – a key waterway for Western grain shippers, including the USA – continued to be hit by below normal water levels due to drought conditions, the report said.

As a result, there had been a reduction in dry bulk vessels using the waterway in recent months and larger grain-carrying ships had been turned away, World Grain wrote.

Karavaytsev said he expected the lower-than-normal volume of grain shipments through the Panama Canal “to persist at least through February”.

“The impact of Panama restrictions has been most evident for grains and oilseeds exports from the US Gulf, with some shipments diverted to alternative routes, including the Suez Canal,” he said.

“This was the case for US soyabeans, with volumes via the Suez spiking in recent months, before plunging more amid elevated security risks and seasonal trends.”

Grain is second only to petroleum among commodities that rely on the canal, according to the report.

In 2022, ships carrying 36.18M tonnes of grain – including corn, soyabeans, rice, sorghum, barley and wheat – transited the Panama Canal from the Atlantic Ocean to the Pacific Ocean while 2.2M tonnes was shipped from the Pacific to the Atlantic. Grain is second only to petroleum among commodities that rely on the canal.

Meanwhile, only 14% of the world’s grain and less than 5% of its soybeans passed through the Suez Canal each year, according to analysis by international affairs think tank Chatham House.