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Red Sea disruptions will cause company earnings to suffer with diversions increasing transit times and costs amid surging inflation, Bloomberg reports. The added time, freight and ins. costs are pushing analysts to reassess company earnings estimates for the coming year with the retail and auto sectors particularly hard hit.
Who’s benefiting from this? Shippers are raking in windfall gains, with container rates rising 300% on certain routes, Bloomberg writes. Air freighters, logistics outfits, and freight forwarders also stand to make large gains if firms turn to airfreight as an alternative to maritime shipping.
Carmakers face added disruptions as car-carrying vessels get rerouted amid Red Sea disruptions, The Financial Times reports. Carmakers are already contending with vessel undercapacity, with some resorting to unconventional methods such as placing vehicles in shipping containers or dry bulk vessels. Diverting around the Cape would cut fleet effective capacity by some 5% to 6%, Gram Car Carriers CEO Georg Whist tells the FT. Car-carrying vessel operators have nearly 185 newbuilds on order at shipyards, the FT writes, citing Clarksons, but deliveries this year are slated to boost capacity by only 7%.
IMEC hits a brick wall due to geopolitical turmoil:Rising tensions in the Middle East due to the war in Gaza are threatening to halt the US-led India-Middle East-Europe Economic Corridor (IMEC) — poised to link India to Europe via the GCC and Israel, Bloomberg reports. Violence in the region “has diverted attention away from discussions on IMEC,” a source in the know told Bloomberg. IMEC’s faltering is a setback for US plans to counter Chinese influence and hasten a KSA-Israel rapprochement, with widespread anger in the Arab World against Israel driving the UAE and KSA — key IMEC participants — less eager to engage with Israel, the outlet said.
ICYMI- IMEC — unveiled at the G20 summit last year — looks to establish rail, maritime, and trucking corridors connecting India to Europe via the Middle East in a bid to boost trade and counter China’s rival Belt and Road Initiative. Biden hinted that IMEC was partially the reason behind Hamas’ attack on Israel last October, as the group looks to block Israel’s integration with Arab States.
IN SECURITY NEWS-
US and UK forces carried out strikes against Houthi targets on Monday, with the attacks targeting underground storage, missile, and surveillance facilities, Reuters reported on Tuesday. The latest round of strikes brings total US-led attacks against the Iranian-backed militia to eight this month, the newswire added. The action was supported by the governments of Australia, Bahrain, Canada, the Netherlands, and the UK, which issued a joint statement on Monday explaining that the strikes are meant to “disrupt and degrade” Houthi abilities to hit at international trade.
The Houthis have claimed responsibility for a successful attack against a US cargo ship, dubbed Ocean Jazz, Reuters reported earlier this week. The US military has denied the claim as “patently false,” maintaining that the vessel transited safely, the US Naval Forces Central Command said on X.
Iran is “very directly involved” with Houthi attacks,US Navy commander Brad Cooper told the Associated Press on Monday. Iran is funding, training, and supplying resources to the militia, Cooper told the newswire. The naval commander also highlighted that the attacks have expanded in terms of geographic scope, describing the campaign against international shipping as “the most significant that we’ve seen in two generations”, he said.
Iraq’s Islamic Resistance group has targeted Israel’s Ashdod port with drones on Tuesday, Lebanese outlet Mayadeen reported. Israeli officials and media have yet to comment on the attacks, IRNA said on Tuesday.
New Zealand is set to deploy a six member defense team to the region, to partake in an international coalition tasked with safeguarding shipping in the Red Sea, Reuters reported yesterday citing Prime Minister Christopher Luxon. Houthi attacks are “illegal, unacceptable and profoundly destabilizing,” Luxon said. The New Zealand mission will be limited to the joint defense of shipping and will not involve combat or a deployment to Yemen, he added. Italy, France, Germany, are also urging fellow EU states to take part in Aspides — a planned EU naval force, which will coordinate with the US-led naval coalition, dubbed Operation Prosperity Guardian.
