How much will the Suez crisis cost Italy?
40% of Italy's import-export passes through the Suez Canal, as well as 10% of oil and liquid gas, but the attacks by the Houthi rebels on commercial ships in the Red Sea are forcing a change of route. Facts, numbers and analysis
Since October 19, the Houthi rebels, based in Yemen but supported by Iran , began attacking commercial ships transiting the Red Sea in an anti-Israel manner. This has forced, for safety reasons, several large freight transport companies to change route, lengthening delivery times and increasing costs .
The United States therefore announced a naval mission to patrol the Red Sea, in which Italy will also participate with the Fasan frigate because, as Defense Minister Guido Crosetto recalled, in addition to wanting to counter the terrorist activity of the Houthis alongside of the international community, our country cannot afford to give up trade via Suez.
HOW MUCH ITALIAN IMPORT-EXPORT GOES THROUGH SUEZ
40% of Italy's import-export transits through the Suez Canal for a value of 82.8 billion euros. This was recently quantified by the fourth report on the Suez Canal presented by Srm, a study center linked to the Intesa Sanpaolo group, and Alexbank, the Egyptian subsidiary of the Italian banking group.
This, we read in the document, is a clear indicator of the importance that the transition has for our country.
WHAT CROSETTO SAID
“There [in the Red Sea, ed. ] calculate that 10% passes through oil alone, then there is liquid gas. We risk finding ourselves with deserted ports in the coming weeks,” Crosetto said yesterday on the sidelines of the Conference of Ambassadors at the Farnesina.
Reason why "Italy – the minister assured – will do its part, together with the international community, to counter the terrorist activity of destabilization of the Houthis, which we have already publicly condemned, and to protect the prosperity of trade and guarantee the freedom of navigation and international law".
WHAT DOES THE SUEZ CRISIS MEAN FOR THE PORT OF TRIESTE…
And Crosetto's prediction was confirmed by Zeno D'Agostino, president of the European Sea Ports (Espo) and the port of Trieste, who said : "As far as Trieste is concerned we will have at least two, three weeks of stoppage".
“From 27 December to mid-January – he specified – we will not have ships that are circumnavigating Africa. If the situation persists, I wonder, what interest does a ship circumnavigating Africa have in entering the Mediterranean or reaching the eastern Mediterranean or the Adriatic? The West Med is saved, the East Med will be served by transshipping”.
…AND FOR CONSUMERS
“An unsafe sea means an expensive sea,” Luca Sisto, general director of Confitarma, the shipowners' confederation, explained to La Verità : “When a sea area enters a phase of insecurity, all the costs of the goods that pass through that area sea increases for everyone. The real costs increase for the end consumers, i.e. for us citizens on the ground. Increases in insurance costs are immediately passed on to the transported goods and final consumers".
In 2022, the newspaper states, Italian ports handled over 490 million tonnes of goods, with an increase of 1.9% on 2021.
THE NUMBERS OF THE SUEZ CRISIS AT A GLOBAL LEVEL
The Suez crisis, although it affects Europe more, as stated by the CEO of Maersk , which has interrupted operations in the Red Sea and expects 2 to 4 weeks of delays, has so far caused the diversion of over 30 billion dollars of goods.
Currently, according to Paolo Montrone, senior vice president and global head of maritime commercial logistics at Kuehne+Nagel, there are 57 container ships circumnavigating Africa – which translated means adding approximately 3,400 nautical miles to the journey, or almost 14 days more . And the number seems destined to rise.
The approximate value of these containers, says Antonella Teodoro, senior consultant at MDS Transmodal, is $50,000, which equates to $35 billion in diverted goods.
A longer voyage, Bloomberg then recalls, also means 1 million dollars more in fuel each way, as well as an increase in the cost of insurance for ships, with the coverage of the so-called "war risk" which is tenfold compared to before the attacks.
THE IMPORTANCE OF THE SUEZ CANAL FOR THE GLOBAL SUPPLY CHAIN
As is in fact clearly visible in the map reported by ISPI and as explained by senior associate research fellow Eleonora Ardemagni, "the Strait of Bab el-Mandab which separates Yemen from East Africa – and leads north towards the Red Sea and the Canal of Suez – is one of the most crucial 'choke points' of international routes together with the Straits of Hormuz and Malacca" and the impossibility of crossing it (think of when the Ever Given ran aground in 2021 ) inevitably has a serious impact on the supply chains global sourcing .
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/quanto-puo-costare-la-crisi-di-suez-italia/ on Wed, 20 Dec 2023 11:47:47 +0000.