Ships Could Return to Red Sea, Lowering Freight Prices
Vessels unconnected to Israel may resume sailing in the Red Sea within a fortnight, reducing freight charges significantly.
"At least 20%, 25%" of sea freight prices could decline over the next two to three months, according to Yuvraj Narayan, deputy CEO of DP World, as stated at the World Economic Forum in Davos, Switzerland.
However, the timeline remains uncertain, Narayan cautioned.
Yemen's Houthis announced on Sunday that they will cease targeting commercial vessels except those linked to Israel and explore suspending all attacks once the Gaza ceasefire is fully implemented.
Since November 2023, the Iran-backed Houthis have executed over 100 ship attacks, sinking two vessels, capturing one, and killing at least four seafarers. They have conducted operations in the southern Red Sea and Gulf of Aden and are still holding 25 crew members from the Galaxy Leader car carrier seized in November 2023.
Many major shipping firms rerouted vessels away from the Red Sea, opting for the extended route around Africa's southernmost tip. This has reduced capacity by at least 30%, according to Narayan, who anticipates a decline in freight rates once the shorter Red Sea-Suez Canal route is reestablished.
DP World, based in Dubai, operates ports globally and manages logistics parks. Narayan indicated the company's interest in Africa's eastern and western coasts, citing vast potential and high cargo transportation costs.
Despite challenges in the UK, DP World is considering investments in the London Gateway port. The $1.3 billion project was rumored to be on hold, but British business minister Jonathan Reynolds later confirmed its continuation.
Narayan emphasized the project's strategic location and the company's commitment to developing London Gateway with the increase in vessel sizes.