Bilgehan Engin: Closure of the Red Sea and Suez Canal to traffic could increase export freight rates

Engin evaluated the effects of the large-scale closure of the Red Sea and the Suez Canal to commercial vessel traffic on global trade and Turkey in an interview with an AA reporter.

Recalling the attacks on some commercial vessels off the coast of Yemen, Engin stated that major global companies do not want to use the route that includes the Red Sea and the Suez Canal due to these attacks.

Explaining that the aforementioned companies are heading toward Europe by navigating around the Cape of Good Hope, accepting a transit time difference of approximately one month, Engin noted the following:

"The impact of this situation, especially on the Eastern Mediterranean and Turkish ports, will vary depending on how long the crisis lasts. Due to the closure of the Red Sea and the Suez Canal to traffic, we can foresee a decrease in container stock in Turkey in the medium term, a subsequent decrease in empty equipment available for export, and an increase in export freight rates, with a similar rise in imports in the first stage. An increase in freight rates on the Far East-Europe route, one of the most important routes of world trade, will be inevitable."

"We do not foresee the crisis continuing for a long time"

Underlining that if the problems in the canals persist, China could adjust its own production to the recession in Europe with a new capacity setting, Engin said this could create a new commercial fluctuation.

Engin stated that they believe the attacks from Yemen can be brought under control within a certain period, adding, "We do not foresee this crisis continuing for a long time."

On the other hand, Engin pointed out that almost all container lines have started to talk about a freight increase, such as an emergency surcharge, averaging 500 dollars per TEU for shipments from the Far East as of January 1.

Engin stated that there is serious congestion at the Port of Mersin because the Port of İskenderun has not yet been able to operate at full capacity following the Kahramanmaraş-centered earthquakes on February 6, and used the expression, "Bringing this congestion under control and relieving the Port of Mersin will be possible in the short and medium term."