Japanese logistics company Mitsui OSK Lines sees Red Sea disruption to last up to 1 year

Cairo – February 7, 2024: Japanese transport company, Mitsui OSK Lines (MOL), sees Red Sea tensions’ impact on global trade to continue for upwards of a year, according to CEO Takeshi Hashimoto.

Hashimoto told Bloomberg on Tuesday that “the situation will continue at least for the coming two or three months. And as a worst-case scenario, six months or one year.” He also added that MOL rerouted its fleet via Cape of Good Hope due to the escalating attacks on vessels by Yemen’s Houthi group.

"Before the Red Sea disruptions, 2-3 ships used to pass through the Suez Canal daily... currently no ships of the company are passing through the canal," Hashimoto said on the sidelines of India Energy Week in Goa.

Houthi attacks on commercial trade ships have raised security concerns, leading to a sharp decline in the number of ships crossing Egypt’s Suez Canal by 30% during the first 11 days of January, causing a 40% decline in Suez Canal revenues.

In January, Bloomberg’s Chief Emerging Markets Economist Ziad Daoud estimated that Egypt has lost around $150 million in Suez Canal revenues “so far.”

Jan Hoffmann, UNCTAD’s chief of Trade Facilitation, previously warned of the large-scale repercussions of disrupting trade, noting in late January that shipping costs have already surged, with energy and food costs being affected and causing higher inflation risks.

The attacks led to shipping companies redirecting ships to longer routes, such as via South Africa’s Cape of Good Hope, triggering significant disruptions in the shipment of grains and other key commodities from Europe, Russia and Ukraine, explained Hoffmann, adding that it has caused increased costs for consumers and posing serious risks to global food security, Hoffmann said.