Yusen Logistics: Tackling Red Sea Crisis & Building Resilient Supply Chain

Red Sea Crisis: A Déjà Vu for Supply Chains
The Red Sea crisis, which started on October 19, 2023, was a déjà vu moment for the supply chain industry, occurring just 2.5 years after the earlier disruption in this region on March 23, 2021, when the vessel Ever Given blocked the Suez Canal. This crucial passage handles 15 percent of global maritime trade volume and 30 percent of containerized cargo traffic.
Even though the Ever Given vessel was retrieved after six days, its impact, coupled with the ongoing Covid-19 pandemic, caused significant ripples in supply chains for many months, leading to exorbitant freight rates. While the previous incident was an accident, this time the disruption is due to attacks from Houthis on vessels passing through the Red Sea.
Increased Freight Rates and Turnaround Time
Apart from the steep increase in freight rates, the crisis has added 14 days to the turnaround time for vessels forced to move via the Cape of Good Hope instead of the Suez Canal. This further creates the demand-supply gap and adds to hidden logistics costs.
More than 90 percent of consumer goods are transported by ocean, and the Suez Canal, the largest man-made canal, is a critical link between the Mediterranean Sea and the Indian Ocean via the Red Sea. This canal ensures the efficiency and responsiveness of supply chains by providing a direct route for shipping freight between Asia and Europe.
Impact of Houthis' Attacks
Since October 2023, more than 60 attacks have been launched by Houthis on vessels in the Red Sea area. As a result, hundreds of vessels have been rerouted, and freight rates have increased manifold. While the entire world is focused on the earliest possible resolution of the Red Sea crisis, nature is also playing a role in another critical shipping passage: the Panama Canal, where severe drought has forced authorities to restrict vessel movement on this route.