Red Sea disruptions benefit shipping companies’ near-term profitability : Fitch Ratings

Global shipping companies’ short-term profitability will benefit from increased freight rates, which exceed the costs of re-routing following persistent attacks on commercial vessels in the Red Sea, Fitch Ratings says. They do not expect structural shifts in the shipping sector as a result of these disruptions.

Nearly half of all cargo ships and tankers have been diverted away from the Suez Canal to alternative routes around the Cape of Good Hope following attacks on commercial ships in the Bab-el-Mandeb Strait. Container freight rates have surged as a result, with the World Container Index rising by 151% since early October 2023. Rates on Asia–Europe routes have increased by 284%, and more than doubled on other main East–West lanes.