Since the fourth quarter of 2023, intensified conflicts in the Middle East have led to Houthi attacks on merchant ships in the Gulf of Suez and the Red Sea, soaring freight costs along the way, and some Asian petrochemical companies are preparing for long delays in transport logistics. Although shipping from Asia to Europe continues, the transport efficiency of petrochemicals in Asia is bound to be affected by longer voyages and tighter shipping schedules around the Cape of good Hope.
According to a report released by    's international freight industry platform Freightos on January 11th, six of the world's top 10 container shipping companies, namely Maersk, MSC, Herberot, ZIM, ONE and CMA, due to the continuing attacks. CGM is diverting ships from the Red Sea. Shipping fleets diverted from the Suez Canal account for 62 per cent of global capacity, according to Freightos. The Suez Canal connects the Red Sea and the Mediterranean, and about 12 per cent of global trade, including 30 per cent of container transport, passes through the Suez Canal. A detour to the Cape of good Hope will lead to longer shipping journeys and increased fuel demand, thus making shipping costs higher. Longer routes lead to higher risks than the usual Red Sea routes, resulting in higher insurance premiums for ships.
   chemical market participants said that as the global economic recovery has not yet fully begun, this year's chemical trade volume will be limited. The continuing conflict in the Middle East will also exacerbate logistics difficulties in 2024, pushing up costs and further curtailing inter-regional trade. In the case of acetic acid, Chinese exports to Europe are expected to shrink in January as the Red Sea crisis pushes up transport costs and spot trade between China and Europe has dried up. Asian-European freight rates for 1000 tons of cargo have soared from about $160 a tonne to more than $200 a tonne, according to shipbrokers. Since December last year, the quoted freight for acetic acid carriers in Asia and Europe has increased by US $50,80,000,000 / ton.
   as for terephthalic acid (PTA), container freight rates are also rising on trade routes from Asia to Turkey and Europe via the Middle East. Transportation costs from Northeast Asia to India are also increasing. According to market sources, container freight has more than doubled from the level of the fourth quarter of 2023. Most of the PTA goods in Northeast Asia are traded on FOB prices, with the buyer paying the freight. As freight rates are relatively low compared with container freight, some importers are looking for alternative forms of trade, such as transporting goods in bulk. In the Asian polyester market, purchases were curbed as freight rates rose as goods were diverted from the Suez Canal and the Red Sea. In terms of oil chemicals, a Southeast Asian fatty acid supplier cut its offer to EU customers because of soaring freight charges on the route.
   polyethylene (PE) market demand for finished products has been stable, but freight rates from Asia to Europe and the United States have doubled or more. "this is a big concern for us because our customers are comparing our prices with quotations from Poland and Turkey, making our prices uncompetitive," said a finished product exporter in Southeast Asia. " One industry insider said that so far, it has had little impact on PE shipped to Europe.
In the    titanium dioxide market, Chinese manufacturers are worried about market share, as rising freight costs push up the landing cost of their products. Because of the high cost of shipping to other regions, sellers may have to focus on the Asian market, thereby increasing supply in the region and increasing competition in the market.
   currently, as the situation in Yemen escalates, the cost of transportation via the Red Sea and Suez Canal continues to grow. "currently, the cost of shipping a 40-foot standard container between China and northern Europe is more than $4000, compared with about $1500 in November last year," Freightos said. On January 8th, for the east coast route from Asia to North America via the Suez Canal, the Freightos Baltic freight index was $4234 per 40-foot equivalent unit, up 69 per cent since mid-December 2023. Compared with mid-December 2023, freight from Asia to northern Europe was $4789 per 40-foot equivalent unit, an increase of 226 per cent, while freight to the Mediterranean was $5202 per 40-foot equivalent unit.
   Freightos predicts that demand for container transport in Asia is likely to increase as shippers try to ship ahead of time to adapt to longer shipping times. The period from mid-January to mid-February may be even worse because of insufficient capacity and possible congestion. Source: China Chemical Industry Daily