Posted on January 24, 2024
As the chart from JPMorgan below shows, the impact has been devastating.
JPMorgan commented as follows:
“The economic spillover in the Middle East has broadened: 12%-15% of world trade passes through the Red Sea, including 30% of global container traffic. More than 100 ships have already been diverted around South Africa, causing shipping rates from Asia to North America to rise by 75% over the last month; Flexport expects them to increase by an additional 50%-100% by the end of January. Most large shipping groups have suspended Red Sea operations, leading to a 1.3% decline in world trade in December. But the overall inflation impact is likely to be modest given very high inventory to sales ratios, deflation in e-commerce, cooling global demand for goods and plenty of capacity in the logistics industry (record containership deliveries expected in 2024).”
