Businesses in Bangladesh are feeling the heat from the turmoil as global reinsurers are raising premiums by 3.5 times to cover the risks associated with the Red Sea Crisis.
The Red Sea links Europe and the Mediterranean with Asia through the Suez Canal. The Red Sea is the passageway for about 12 per cent of all trade, including 30 per cent of all container traffic worldwide.
Apparel retailers and brands have to count the additional costs due to the crisis, which has forced users to move goods through the alternative route.
Since the new route around the Cape of Good Hope in South Africa is more expensive and takes longer, there is a greater reliance on air shipments to transport commodities from Asia to Europe.
In comparison to the standard shipping route via the Suez Canal, the new route requires cargo-laden vessels to travel an extra 3,500–4,000 km, which adds 15 days to the journey time.
Because of the attacks on commercial vessels, moving commodities is becoming more difficult for all the countries that trade with Europe.
The increased cost of shipping coincides with a period of strain on Bangladesh’s export industry as major countries see a downturn in consumer demand, and clothing exporters are rushing to produce goods for the summer season.
In addition, war risk premiums have surged to nearly 1 per cent of a ship’s value, up from the previous 0.7 per cent, it said citing global media outlets.
