Ongoing Houthi attacks on cargo ships in the Red Sea have triggered a staggering 70% decline in cargo volume, rippling through global trade. Wheat shipments passing through the Suez Canal recorded a 40% decline in the first half of January.
The December 2023 update of The Kiel Trade Indicator highlights the severe impact of Houthi attacks on Red Sea cargo ships. Cargo volume has plummeted by nearly 70%, causing increased freight costs and prolonged shipping times between East Asia and Europe.
Global trade experienced a 1.3% decline from November to December 2023. Both exports and imports for the EU were in the red, reflecting negative trends. Germany's foreign trade continued its recent weak phase, with month-on-month decreases in both exports (-2.0%) and imports (-1.8%).
The Kiel Trade Indicator also showed a decline in December trade in the USA, despite the Red Sea route playing a lesser role than in Europe. China, however, defied the trend with figures for both exports (+1.3%) and imports (+3.1%) pointing upwards, possibly influenced by an annual peak before the Chinese New Year.
Despite these challenges, the director of the Trade Policy Research Center underscores the ramifications: "The detour of ships around the Cape of Good Hope means that the time to transport goods between Asian production centers and European consumers is extended by up to 20 days."
Despite the spike in transportation costs, Hinz clarifies, "No noticeable consequences for consumer prices in Europe are expected."