Red Sea, specter of a new inflationary spiral. Assoporti: “The crisis must recede within 4-5 months”

Brussels – The Italian port system is watching with fear the evolution of the crisis in the Red Sea because if cargo ships remain the target of Houthi rebel’s raids for long, shipowners will increasingly choose new routes and the Mediterranean will lose the commercial centrality it was regaining after the pandemic. The president of Assoporti, Rodolfo Giampieri, draws his red line: “The whole thing must be resolved within 4-5 months.”

Reached by Eunews, the number one of the Italian Ports Association commented on the escalation in the Middle East and foreshadowed the possible fallout for the entire logistics supply chain,  both European and global. “There seems to be a perfect storm right now in the world, a set of negative situations that affect markets and the economy,” Giampieri said, and the Mediterranean, which was enjoying that process of shortening the supply chain triggered by the pandemic crisis, may be paying the price: “The issue is that some of the ships are choosing a different route. A shipowner who chooses to circumnavigate Africa is unlikely to enter the Mediterranean from the Strait of Gibraltar, he will almost certainly arrive in Northern European ports.”

This is the element “that is of concern and needs to be watched out for, especially tying it to the duration of the crisis. “In the most optimistic scenario, that of a de-escalation in the short term, “the damage will be sustainable and should not affect the price at the shelf, the cost of goods.” If, on the other hand, the crisis lasts longer than 4-5 months, it will trigger new inflationary pressures.

The signs are already there: fuel has already increased by approximately 7 per cent and “in a shipowner’s budget it is a very important variable accounting for around 30 per cent.” Freight rates have risen again: from around a thousand euros per TEU (a standard measure in shipping that corresponds to the size of the 20-foot ISO container) to 3-4 thousand euros per TEU, although still far from the pandemic peaks of 10-12 thousand euros per Teu. And ship and cargo insurance,  “have reached peaks of almost ten times the initial value.”

The data on cargo ship transits from the Suez Canal in the first ten days of the new year are unequivocal: 65, compared to 143 in the same period in 2023. 55 per cent fewer. A good chunk of these docked in Italian ports, from which goods were distributed to the rest of Europe. “In Italy, this sharp reduction in transit through the Suez Canal puts in trouble logistics that had reached very high levels of organization,” Giampieri admitted. Logistics is not everything, indeed: 40 per cent of Italian import-export passes through the Suez Canal, worth about 154 billion. This is a figure that gives a good idea of how crucial it is for the Italian economy that the isthmus remains navigable.

“We must emphasize the attention of the Italian government and the navy, which are accompanying Italian ships several times to contribute to their security,” Giampieri stressed. But the determining element is the duration of this crisis: the EU, which is trying to tighten the timetable to present its plan for a naval mission in the Red Sea, knows this. In the morning, at the Political and Security Committee (COPS), EU ambassadors gave a general consensus to proceed with the creation of a mission based on the already existing AGENOR—led by France—and with an area of operations “from the Gulf and the Strait of Hormuz to the Red Sea.” The goal would be to establish the mission by Feb. 19.