Fuel costs rise as ships reroute amid the Red Sea crisis

Expressing concerns about maritime safety, the Chief Operating Officer (COO) of the Caravel Group, overseeing one of the world’s largest ship managers Fleet Management, stated that numerous responsible shipowners and charterers are opting to avoid navigating through the Red Sea and the Suez Canal due to the inherent risks involved. Speaking at an event held by the Hong Kong Foreign Correspondents’ Club, it was clarified that despite the perception that only vessels owned or controlled by the US, UK, or Israel are targeted and at risk, the reality is different, with targets from other countries also facing threats.

Highlighting the financial implications, it was estimated that rerouting through Cape Town could result in an additional fuel cost ranging from approximately $200,000 to $300,000 per trip from Asia to Europe, considering an extra 15 days of voyage, fuel consumption of 30 tonnes per day, and a fuel price of $650 to $700 per metric tonne.
As per Ship & Bunker, the present price of very low sulfur fuel oil (VLSFO) stands at $652.50 per tonne in Hong Kong and $648 per tonne in Singapore. Over the past six months, VLSFO prices in Hong Kong have fluctuated between $599.50 and $710.50 per tonne.

Meanwhile, highlighting the decline in traffic through the Suez due to threats of attacks from the Houthi Armed Forces, it was emphasized that seafarers on these vessels face significant risks. Certain trade union-related regulations established by the International Bargaining Forum were also mentioned, granting seafarers the right to refuse to enter the zone seven days before its vicinity.

Concerning operational decisions, it was noted that Cetus Maritime, managing a fleet of over 40 bulkers, is currently refraining from dispatching ships to the area. Distinguishing the Red Sea situation from the Somalian pirate crisis in 2011, it was pointed out that armed guards on board may not be sufficient to counter drone and missile attacks in the Red Sea.