Freight costs through the Mombasa port are poised to rise due to the effects of the Israel-Iran conflict, as shipping lines are forced to divert their vessels through a longer Cape of Good Hope route.
Top shipping lines are avoiding the Suez Canal and Strait of Hormuz until further notice to avoid attacks by the Iran-backed Houthis in Yemen.
Kenya’s key export products, including tea and coffee, will also have to wait longer at the port before they are picked as vessels reschedule their traffic, with the cost of petroleum products expected to increase significantly due to the cut of the supply chain.
Major shipping lines have issued advisories to their customers on the change of trade routes, which will lead to an increase in emergency conflict surcharges from between $20 (Sh2,580) to $40 (Sh5,160) for 20-foot containers.
On Sunday, Maersk, CMA, CGM, and MSC shipping lines sent notices, some confirming the suspension of all bookings for worldwide cargo to the Middle East until further notice.
“CMA, CGM advises that all vessels inside the Gulf and bound to the Gulf have been instructed with immediate effect to proceed to shelter. Passage through the Suez Canal has been suspended,’ read a notice by the shipping line.
Maersk said, “All sailings will now be directed to go round Africa.”
Kenya Ships Agents Association CEO Elijah Mbaru said the closure of the Red Sea route as a result of ongoing conflicts and the attack on an oil tanker will have economic impacts on the East African countries, with oil prices expected to increase by nearly 20 percent, considering the route is a global crude oil corridor.
“We expect ocean freight surge for tankers, bulk, and container lines, and we expect longer transit times, which will lead to container imbalance and schedule unreliability. The factor will lead to spikes in oil prices, which could also increase the cost of food, transport, and fertilisers,” said Mr Mbaru.
On Sunday, an oil tanker, Skylight, was attacked near the Strait of Hormuz, marking the first confirmed targeting of a vessel in the waterway amid the intensifying conflict.
The Malta-flagged vessel was reportedly struck approximately five nautical miles north of Khasab Port, within Omani territorial waters at the entrance to the Strait. Following the impact, the vessel caught fire, triggering an emergency maritime response from nearby ships and Omani search and rescue authorities.
As war intensifies, the cost of goods is expected to increase as ships intend to introduce war-risk insurance premiums for Gulf transits, with some insurers temporarily withdrawing coverage for vessels entering the region.
Shippers Council of Eastern Africa (SCEA) CEO Agayo Ogambi said the freight disruptions coincide with the avocado season, which will delay exports of the perishable crop.
“Freight time will increase as vessels re-route via the Cape of Good Hope. The Red Sea, which connects the Red Sea to the Mediterranean, ensures that shipments from Mombasa reach Europe within 18 - 20 days. As a result of re-routing, it shall take up to 40-45 days, and this will lead to cold chain disruptions, higher rejection rates by buyers, and financial losses for exporters,” said Mr Ogambi.
The Red Sea is one of the most crucial maritime trade corridors in the world. Handling over 30 percent of global shipping traffic.
According to maritime expert Andrew Mwangura, any disruption could trigger a global oil shock, significantly raising energy prices even in countries not directly reliant on Gulf oil exports.
