Insurers double premiums for shippers using Red Sea

Zawya

3 days ago

Traders in East Africa are bracing for more delays in the delivery of cargo after the Yemeni rebel group, the Houthis, this week threatened to escalate attacks on vessels that deal with Israel or fly its flag.
This will hit tea exporters hard, as they will have to bear increased costs and delays in cargo delivery and the collection of empty containers at Kenyan and Tanzanian ports due to longer shipping routes.
Shipping companies are mulling raising freight costs later in August if the situation persists.
East African Trade Association (Eatta) managing director George Omuga on Thursday said that most tea dealers had shifted to shipping lines not targeted by the Houthis, 'but this week's announcement has complicated the matter.
According to tea dealers, the cost of exporting a 40-foot container to Russia, Kenya's fifth biggest market, was $2,442 early this year, but tripled to $6,513 in June, and with no end to the Red Sea crisis in sight, it is expected to hit $7,000.
Meanwhile, insurance premiums of shipping goods through the Red Sea have now risen to around 0.7 percent of the value of a ship, from around 0.3 percent a month ago, with some underwriters pausing cover for certain voyages.
Data from various vessel-tracking websites show that ships destined for the ports of Mombasa and Dar es Salaam will be delayed by three to four weeks due to longer routing to avoid potential attacks.
The rebels want 'all countries, if they wish to avoid this escalation', to pressure Israel 'to stop its aggression and lift the siege on Gaza'.
On Wednesday, Human Rights Watch (HRW) declared that the attacks which sank two commercial cargo vessels, MV Magic Seas and the MV Eternity C, between July 6 and July 9 were violations amounting to war crimes.
HRW stated it found no evidence that the ships were legitimate military targets or had any connection to Israel, noting the attacks resulted in crew deaths and unlawful detentions.
Reports from the Shipper Council of Eastern Africa (SCEA) show that freight rates have increased on routes affected by the crisis. For example, charges for shipping a container from Shanghai to Rotterdam have jumped from $1,800 to $6,000.'Freight rates are expected to remain volatile as the situation in the Red Sea continues to evolve,' said SCEA CEO Agayo Ogambi.
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