homevideos Newsworld NewsThe Red Sea attacks have halved Suez Canal traffic — how is global inflation still under check
The Red Sea attacks have halved Suez Canal traffic — how is global inflation still under check
The Suez Canal, through which about 15% of the world's ships pass through, has seen a sharp fall in traffic. The chairman of the Suez Canal Authority said that revenue had fallen by 40% in the first 11 days of January.
The flaring tensions in the Red Sea have forced shipping companies to reroute their cargo, adding anywhere between eight to 18 days to the travel time.
The Suez Canal, through which about 15% of the world's ships pass through, has seen a sharp fall in traffic. The chairman of the Suez Canal Authority said that revenue had fallen by 40% in the first 11 days of January.
While this has stretched global supply chains, they haven't completely stalled, keeping inflation in check, according to Moody's Analytics. This is because freight costs are a small fraction of overall cost of a product, an economist explained in an interview with CNBC-TV18.
"We are right now assuming that a lot of this sorts itself out by the end of the first quarter, or, perhaps, some time in the second quarter. If it continues for a period of one year, we are looking at slightly different scenario," Gaurav Ganguly, Senior Director of Economic Research at Moody’s Analytics, added.
A similar disruption in sea routes during the COVID-19 pandemic had led to a 500% jump in shipping costs by October 2021, compared to a year earlier, making end products more expensive.
Meanwhile, the US military conducted two strikes in Yemen, claiming to have destroyed two Houthi anti-ship missiles targeted at the Red Sea.
At least 16 ships have been since mid-November, when the Houthis — who claim to acting in solidarity with the Palestinians — began attacks, according to data from Ambrey Analytics cited by Bloomberg.
Recent reports indicate that the Israel-Hamas conflict, now in its 110th day, may lead to a 30-day ceasefire agreement in Gaza.
Watch accompanying video for the full interview.
(Edited by : Sriram Iyer)
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