Diversions from Red Sea add US$1M per voyage, research shows

The LSEG calculates the "incremental costs" of diverting a tanker transiting from Asia to northwest Europe via the Cape of Good Hope adds US$932,905 per voyage while increasing transit time from 16 days to 32 days.

Added costs are attributed to extra fuel. According to the report, the diversion on the route increases costs for an Aframax tanker by 110% and 35% for a large container ship.

Traffic through the Red Sea and Suez Canal has seen a steady decline since Houthi forces began firing at merchant vessels in the region.

"Average monthly transits through the Suez from June to November 2023 were seen at 1,914. This dropped to 1,672 in December, a 12.6% drop in transits, and January month-to-date transits are assessed at 947 as of 22nd Jan, which translates to a 32.6% decline," LSEG said.

"Daily container vessel traffic within the Red Sea has dropped by almost 60% since mid-December, with the larger container ships being the most responsive to avoid the region as their transits have declined by over 80%."

Maersk is a recent target of fire from the Houthi forces, with two reports of vessels being targeted, though not struck in late January. 

US Central Command (US CENTCOM) said, "On 24 January at approximately 2 pm (Sanaa time), Iranian-backed Houthi terrorists fired three anti-ship ballistic missiles from Houthi-controlled areas of Yemen toward the US-flagged, owned and operated container ship Maersk Detroit, transiting the Gulf of Aden. One missile impacted in the sea. The two other missiles were successfully engaged and shot down by USS Gravely (DDG 107). There were no reported injuries or damage to the ship."
For those that elect to transit via the Red Sea, ships are also using AIS to broadcast deterrence messages in addition to standard security protocols.

LSEG global head of shipping Fabrice Maille comments, “The impact of this conflict is... considerable leading to very difficult decisions to be made regarding financial costs and security risks."