Crypto News: Supply Lines: Predicting Red Sea diversions

Widespread container-shipping detours to avoid Houthi attacks in the Red Sea are expected to extend well into the second half of this year and maybe into 2025.

Those possibilities were discussed on a conference call this week featuring a well-known analyst, the CEO of the world's No. 5 carrier and an executive at one of the world's largest freight forwarders.

The three were asked how long they expected ships would go around southern Africa rather than take the faster journey through the Suez Canal and the Red Sea, where some 65 merchant ships have been attacked since mid-November, according to one tally, and where cargo shipping traffic has dropped by about half.

Their consensus answer: It all hinges on when geopolitical and military conflict in the region is resolved. Here are some more of their observations.

Alan Murphy, the founder of Sea-Intelligence:

"Obviously shipping lines are not going to reroute the networks through the Suez Canal again before it's safe to do so. That said, even if the conflict was resolved magically tomorrow, we wouldn't see Suez transits tomorrow."

For ocean freight routes to return to normal, there must be assurances that the Red Sea is safe over the longer term, he said. And even with those in place, the schedule adjustments can take several months given the distances involved.

"If we ever have a long-term safe resolution to the Red Sea crisis, it's going to take six to 12 months before we actually have stable networks running through the Suez again," Murphy said.

Rolf Habben Jansen, the CEO of Hapag-Lloyd:

He said the company's ships are taking seven to 10 days longer to go around the Cape of Good Hope. "The safety of our people is more important than seven days transit time," Jansen said.

The good news is that stability has returned to the system after more than four months of regular attacks, he said. The bad news is there's no way to predict when it'll be safe to take the Suez shortcut again.

Still, Jansen said he has a more optimistic outlook than Murphy's six- to 12-month timetable for the full return of normal services through Suez once the crisis is resolved.

"I think that will go a little bit faster — in reality you should be able to do that in one round trip, which is probably 14 to 17 weeks," he said.

Thorsten Meincke, a member of the management board for air/ocean freight at forwarder DB Schenker:

He declined to forecast how long the Red Sea turmoil would continue but said Schenker is expecting it to last for potentially the rest of the year.

"It takes us at least into summer because that would already require getting it solved as we speak right now and that is probably very unlikely," Meincke said. "So our planning goes that we need to continue with this throughout 2024."

Related Reading:

—Brendan Murray in London

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