Vehicle carrier operators divided over Suez route as more ships divert via South Africa
Diversions are expected to result in increases to already record high spot freight rates and vessel charter rates
Cosco, K Line, NYK and Grimaldi are still utilising the Suez Canal for vehicle carriers bound to and from Europe from Asia, but other operators are routing ships via the Cape of Good Hope, adding up to two weeks to transit times
VEHICLE carriers rerouting from the Suez Canal to the Cape of Good Hope by several leading operators is adding up to two weeks to transit times, which is expected to worsen a vessel supply crunch driven by surging Asian car exports, in particular from China.
In December, the world’s largest operator of pure car and truck carriers, Wallenius Wilhelmsen, was the first company to make public its decision to reroute all ships previously planned for Red Sea transit via the Cape of Good Hope.
“The deviated routes will add an estimated 10-14 days in extra sailing time,” said Wallenius Wilhelmsen.
A spokesperson for the Oslo-listed company told Lloyd’s List: “We are doing everything we can to support vehicle manufacturers including clear, timely, frequent communication, detailed forward planning and preparation with terminals for adjusted vessel schedules.”
Diverted voyages are expected to increase already record-high spot freight rates, which have risen by an average of 26% in the past year.
Average 12-month time charter rates for a 6,500-car capacity ship jumped from about $22,000 in 2021 to $115,000 now.
To monitor the dynamic situation, Wallenius Wilhelmsen said it is “evaluating operational, legal and commercial implications over the next couple of months.”
Wallenius Wilhelmsen has a majority stake in South Korean vehicle carrier operator Eukor, which also appears to be avoiding the Suez/Red Sea route.
Fifth-largest operator Höegh Autoliners also confirmed that it would not make transits through the Red Sea “for the time being” after the Norwegian Maritime Authority advised in December to avoid it.
But the company should be less affected by diversions. Most of its vessels bound from Europe to and from the Far East and Australasia already go via the ports of Durban and Port Elizabeth due to contract commitments with German carmakers, which have manufacturing facilities in South Africa.
Vehicle carrier tonnage provider Gram Car Carriers, which controls 19 PCTCs of between 3,500 car and 7,000 car capacity for the charter market, notified its vehicle carrier operator clients that its ships are restricted from passing through the Red Sea for the time being “due to the increased risk levels in the area as reflected in the Norwegian Maritime Authority raising the security level in the southern part of the Red Sea to the highest level.”
Japan’s Mitsui OSK has yet to announce a position, but it also appears to be avoiding the Red Sea route. It has six vehicle carriers sailing around South Africa. While one of these is bound from the US east coast to Asia the remainder would normally have taken the Suez Canal from Asia to Europe.
According to Lloyd’s List Intelligence data, there are no MOL-controlled PCTCs destined for the Suez Canal either northbound or southbound, while only one its ships passed through the Red Sea in the final week of December. The company normally has up to five ships per week using Suez on Asia/Europe service.
Meanwhile, vehicle carriers operated by COSCO, K Line, NYK and Grimaldi continue to use the Red Sea/Suez Canal for their vessels bound to and from northern Europe, the Mediterranean and Asia.
As of today, January 10, NYK has four vessels sailing northbound through the Red Sea, while one vessel is heading southbound. NYK is the charterer of Galaxy Leader (IMO: 9237307) which was boarded by Yemen’s Houthi rebels in November in the Red Sea. The 5,000 car capacity ship, which was empty at the time of the attack, was forced to sail to the Yemeni port of Hodeidah and remains under the control of the rebels.
Cosco’s 5,000 car capacity COSCO Shengshi (IMO: 9454711), in service between northern Europe, the Middle East and China, exited the Red Sea this morning following its transit of the Suez Canal on January 7, while Grimaldi’s 7,600 car capacity Grande Houston (IMO: 9782699) and Grande Florida (IMO: 9782716) are both heading northbound in the Red Sea from Asia to the Mediterranean, and ultimately northern Europe.
