In the wake of mounting tensions in the Red Sea, FIATA has released a call to action for strengthened international dialogue and monitoring between governments and industry decision-makers to ensure maritime supply chain fluidity and connectivity amidst surcharges imposed by shipping lines operating on and outside of the Red Sea and Suez Canal, for the protection of consumers and economies worldwide.

The Red Sea, one of the busiest waterways in the world linking Europe and Asia, has become a focal point of concern in the context of persistent attacks against commercial shipping. Approximately 18 shipping lines have either stopped or rerouted traffic on the waterway due to ongoing attacks, with increased transit times of around 12 days due to rerouting via the Cape of Good Hope. Amid sharp increases in freight rates, concerns are being raised on the extent of surcharges levied on both affected and unaffected routes. Careful management will be required to mitigate impacts on international trade. In its recent communication[1] and position paper[2], FIATA calls for governments and all supply chain stakeholders to strengthen international dialogue and collaboration to facilitate a coordinated approach to finding and implementing united solutions for a resilient maritime supply chain.

Drawing lessons from the recent maritime crisis, and at a time of significant inflationary pressure, FIATA has urged shipping lines at large to exercise particular care in the imposition of surcharges, and to communicate additional surcharges in a transparent and clear manner. Prof. Sys, Professor at the University of Antwerp in the Department of Transport and Regional Economics, describes the surcharges levied as being of an “unprecedented magnitude” given the discrepancy calculated between the proportion of surcharges, and the actual costs incurred when rerouting ships away from the Suez Canal. FIATA also raises concerns about the lack of information on the content of these surcharges, noting the alarming ‘all in’ invoicing with no itemisation of the various components for shipments.

Discussions with Ms Teodoro, Senior Transport Consultant at MDS Transmodal, have indicated that there is sufficient capacity to reroute vessels around the Cape of Good Hope, but that the main challenge will be to understand how such capacity can be competitively and flexibly managed to minimise further disruptions. The impact on ports and global supply chain connectivity is concerning, noting that some ports could be be severely disadvantaged.

At a time of significant inflationary pressure, careful management and coordination will therefore be needed to protect consumers, the global supply chain, and economies worldwide, in particular those of developing countries, and the protection of human life. FIATA calls on the international community to ensure appropriate and coordinated monitoring is in place, noting that supply chain disruptions are dependent on and touch upon many different stakeholders around the world.

FIATA joins the International Maritime Organization (IMO) in supporting the United Nations Security Council’s Resolution 2722 (2024) which affirms the need to respect the exercise of navigational rights and freedom by merchant vessels, in accordance with international law, and supports the IMO’s continued work to enhance the safe and secure transit of vessels through the Red Sea and to closely monitor the situation in collaboration with Member States and industry partners.

Source:
fiata