Ships Rerouted via Cape of Good Hope Finally Fill UK Docks
PoundSterlingLIVE
Published Jan 26, 2024 09:57
Updated Jan 26, 2024 10:11
Ships Rerouted via Cape of Good Hope Finally Fill UK Docks
PoundSterlingLIVE - UK docks are busy again as ships that rerouted via the Cape of Good Hope in December arrive.
Analysis from Deutsche Bank (ETR:DBKGn) finds UK port flows are back to 'normal' after plummeting in December, suggesting a "contained" impact of the Red Sea disruptions.
To be sure, the impact on UK inflation remains to be seen, according to Sanjay Raja, Senior Economist at Deutsche Bank.
"The January flash PMIs sent some alarm bells ringing, with an increasing focus on Red Sea tensions," says Raja. "With transport routes extended by 7-10 days, we saw a sizeable 10pt fall in suppliers' delivery times, with survey respondents noting an uptick in both input and output prices."
January's S&P PMI survey of the world's major economies series found the rise in delivery times was far more acute in the UK than elsewhere, with 95% of international freight transiting via sea.
But Raja has studied dbDIG shipping data that tracks the movement of ships globally and concludes that the overall impact of disruptions to shipping in the Red Sea will be contained.
The data reveals container ship activity through the Red Sea transits of Bab El Mandeb and the Suez Canal are down significantly.
At the same time, a near 6x increase in the number of ships transiting The Cape is noted.
"The knock-on effect on container ship arrivals to the UK can be seen clearly as it plummets over Christmas but recovers swiftly in January as the re-routed ships complete their journeys," says Raja. (See chart above).
"The impact on inflation will be important to watch going forward. Shipping costs have risen – though are nowhere close to where they were during the height of the pandemic," says Raja.
Based on these findings, the Deutsche Bank analyst thinks that "the impact will be broadly contained given that port flows are back to 'normal' - highlighting a more limited supply shock in the midst of still weak goods demand and large inventory holdings".
An original version of this article can be viewed at Pound Sterling Live
Get The App
Written By: PoundSterlingLIVE
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.