DP World: Shipping Rates Could Drop 20-25% after Red Sea Attacks Halt

DP World’s deputy chief executive said that shipoing vessels not linked to Israel could start returning to the Red Sea in just two weeks, adding that this could push freight rates “down sharply”.

Shipping rates could fall by at least 20%-25% over two to three months, Yuvraj Narayan told Reuters on the sidelines of the World Economic Forum in Davos, Switzerland.

However, the Dubai-owned company’s deputy chief executive and chief financial officer added that it was difficult to predict a specific time frame, according to Reuters.

Yemen’s Houthi group said on Sunday that its attacks on commercial vessels would be limited to those linked to Israel and that it would consider halting attacks completely once a ceasefire in the Gaza Strip was fully implemented.

The Iran-backed Houthi group has launched more than 100 attacks on ships since November 2023, sinking two ships, seizing another and killing at least four sailors.

This prompted many major shipping companies in the world to change the course of their ships to sail around southern Africa instead of the Red Sea.

Narayan said that this resulted in a loss of additional shipping capacity estimated at least 30% of the usual. He pointed out that shipping prices are expected to decrease once the Red Sea and Suez Canal routes are returned to the shorter route.

Global shipping lines will resume normal navigation in the Red Sea and the Suez Canal, and the movement of ships will be fully regulated in the second quarter of this year in this waterway.

The rise in shipping prices in the world and the disruption of supply chains, in addition to the lack of passage through the Suez Canal and the drought in the Panama Canal, all of these factors have confused the shipping and maritime transport sector during 2024, which was reflected in the increase in shipping prices for containers or solid and liquid goods.

Some global shipping companies, such as Maersk and Hapag-Lloyd, expect that they will continue to sail around the Cape of Good Hope during the first half of 2025, which contributes to increasing shipping prices, in addition to the container crisis in ports, in addition to the trade war between America and China, which has a major impact on the sector.