News / Some ro-ro operators carry on sailing, even as Red Sea conflict heats up

Some ro-ro operators are chancing their vessels transiting the Red Sea, just as the crisis deepens with the UK, US and others launching airstrikes against Houthi targets in Yemen.

News broke late last night that the US and UK governments, with tactical support from Australia, had begun retaliatory strikes against the Iran-backed militia that has waged a two-month assault on vessels it accuses of supporting the Israeli war in Gaza.

While box ships ended 2023 with a wave of cancellations and diversions around Africa’s Cape of Good Hope, bringing delays and rate spikes, car-carriers remained quiet.

According to one forwarder, there was a sense that ro-ro operators “don’t seem spooked” by the threat of attack, with a “fair percentage” of car-carriers appearing to be still transiting the embattled waterway.

Grimaldi and NYK are among those still sending vessels through the Suez Canal, the former’s confidence predicated on Italy-flagged vessels having Italian naval support; while a spokesperson from Japanese carrier NYK told The Loadstar: “NYK evaluates individual vessels on the risk, and the deviation via the Cape is, of course, one of our options.”

And one source told The Loadstar the risk-taking may also be “down to better insurance”, explaining that in an an already high-demand sector ro-ro operators would “rather than take the longer route to generate surcharges, try to rotate vessels as quickly as possible”.

The source added: “The rates are already inflated on ro-ro movements, so they will take the risk.”

For some others, though, the risk of attack has seemingly deterred them, with Hoegh both rerouting its car-carrying vessels around the Cape and, purportedly, implementing a surcharge. And Wallenius Wilhelmsen informed customers last month it would be avoiding the Suez Canal because of the “deteriorating situation in the region”, stressing that the safety of its crews was paramount.

Car manufacturers, however, will be concerned by further delays to a market showing signs of struggle due to the Red Sea crisis, with Tesla already having announced it had been “forced into pausing most production” at its Berlin factory, from 29 January to 11 February, by parts shortages.

The crisis was also having an “impact on production in Gruenheide,” Tesla, the second-biggest seller of electric cars, added.

Elsewhere, South Korea’s Ministry of Oceans and Fisheries has said containerships could be brought in to ship some car exports. Vice-minister Song Myeong-dal yesterday met with HMM, the Korea Shipowners’ Association, Korea International Trade Association and Korea Maritime Institute.

Mr Song said: “In preparation for the disruption of automobile exports, we have decided to support containerships as an alternative means of transportation and to secure additional container yards to strengthen storage capacity.”

Last year, carmakers in South Korea, including Hyundai, Renault and KG Mobilty, resorted to using box ships due to a lack of car-carriers, despite the risk of damage to the new vehicles.

Mr Song said South Korea’s box carriers must be prepared to allot vessels for unscheduled sailings, with HMM having already started doing so; its first such “extra loader” services beginning on Monday.

However, a company spokesperson told The Loadstar no specific plans had yet been confirmed in relation to car transport.

Mr Song added: “We can’t rule out possibility that the Red Sea crisis could spread to other parts of the Middle East. We’re striving to minimise the impact on our inbound and outbound logistics by pre-empting seaborne transportation demand with shipping companies.”

To manage soaring freight costs, the ministry has set up a hotline for shippers to report any unfair extra charges.