Rental costs have doubled and transport times have increased significantly. The tensions on the Red Sea related to the attacks by the Houthi rebels are having an impact on the national and European economic systems. A survey by the Italian business association Confcommercio has shown the impact of the Red Sea crisis on the transport system and the import-export business of Italian companies.
Shipping times in the Far East are extended by ten to twelve days
Expressed in numbers, transport times in the Far East are extended by ten to twelve days due to the circumnavigation of the African continent. The freight costs for a 40-foot container on the Shanghai-Genoa route have more than doubled since 2023 (plus 129 percent). Ship transit through the Suez Canal, through which around 40 percent of Italy’s maritime trade (around 154 billion euros) flows, has fallen by more than a third. This represents a severe disadvantage both for national ports, particularly those on the Adriatic such as Trieste and Venice, which are more affected by international traffic, and for the Italian system in general.
As far as international trade of Italian companies is concerned, Confcommercio explains that the main problems concern imports. It is estimated that 16 percent of Italy’s goods imports, in value terms, pass through the Suez Canal. When imported goods do not arrive, Italian companies are often subject to heavy penalties as suppliers in a supply chain. The automotive industry, fashion and some food sectors are the sectors suffering most from the slowdown in imports and reduced maritime traffic through the Suez Canal.
Freight costs have more than doubled
Therefore, apart from the need to restore the safety and practicality of the Suez Canal route, according to Confcommercio, immediate measures are required in the field of transport and logistics, such as the suspension of the Emissions Trading System (ETS) for traffic destined for European transshipment ports, such as Gioia Tauro , and the lifting of restrictions on the transit of trucks over the Alpine passes (Brenner). On the import-export side, forms of contractual protection or ad hoc insurance must be created immediately for companies forced to pay penalties to their customers for delays or non-delivery of imported goods.
According to data from the Drewry Research Center, freight rates for a 40-foot container on the Shanghai-Genoa route averaged $6,300 (5,850 euros) in the last week of January, up 129 percent compared to the same period in 2023 .
Longer transport times and the associated increase in transport costs are already making themselves felt in the national and European economic systems. Delivery delays, for example, affect sectors that are particularly dependent on deliveries from China, such as the automotive industry, with production restrictions and temporary factory closures. On the other hand, trade between countries is inversely proportional to their distance and the resulting transport times. For trade between Singapore and Rotterdam, whose route has increased by around 40 percent due to the circumnavigation of Africa, this would mean an estimated decline of around 30 percent.
The impact on the international trade of Italian companies
A full quantification of the higher container transport costs and longer delivery times due to the (longer) alternative routes on the import-export activities of Italian companies is still in progress. On the one hand, experts from the Kiel Institute point out that today’s situation is not comparable to the times of the Evergiven incident in the Suez Canal and the coronavirus pandemic; On the other hand, the above-mentioned analysis of the elasticity of trade exchange to transport distance suggests that smaller and less structured companies will have greater difficulty absorbing the higher costs and will exit the market.
The vast majority of Italian exports go to other European countries and the United States, but the biggest problems arise on the import side. If you look at the 15 most important countries of origin of Italian imports, only two countries are potentially affected: China (in second place, 8 percent of Italian imports) and India (in fourteenth place, 1.6 percent of Italian imports), but the volumes are almost twice as high, with the Bank of Italy estimating shipments through the Suez Canal at 16 percent of Italy’s goods imports by value.
This translated article previously appeared on FashionUnited.it