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INSA expects further rise in freight rates due to Red Sea risks
The local shipowners' association has pointed to a surge in fuel costs and insurance premiums related to the global shipping industry as a result of the ongoing crisis in the Red Sea.
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A crane unloads a container on Jan. 6, 2024 a ship at Belawan Port in Medan, North Sumatra. (Antara/Yudi)
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reight rates are expected to keep rising in the coming months due to prolonged conflict in and around the Red Sea, according to the Indonesian National Shipowners Association (INSA), which previously projected a 56-63 percent increase.
INSA chair Carmelita Hartoto said the Red Sea crisis had forced many ships bound for Europe or Asia to detour around South Africa, increasing fuel consumption.
“This leads to a longer voyage, adding 10 to 14 days on top of the normal travel time,” Carmelita said on Sunday, as quoted by Kontan.
She also said shipping insurance premiums were rising as insurers anticipated more risks stemming from Russia’s invasion of Ukraine and Israel’s war in Palestine.
Demand for cargo shipping services would likely remain strong regardless of the conflicts, she continued, as sea transportation was still deemed the most efficient way to transport goods internationally.
Since early January, the Houthi rebel group, which controls most of Yemen’s Red Sea coast as well as capital Sanaa, has been attacking commercial vessels with alleged links to Israel sailing the Suez Canal to express solidarity with Palestinians in Gaza.
The attacks have prompted the world’s top shipping companies to avoid the major trade route in Egypt connecting to the Mediterranean Sea, which accounts for 12 percent of global maritime traffic.
