February 2, 2024
PHNOM PENH – A senior official from the Cambodia Logistics Association (CLA) has warned that conflict in the Red Sea has doubled the costs of shipping goods to the US, Canada, and Europe. Transport prices in Asia are also tipped to rise in the near future.
CLA president Sin Chanthy said members of the association began notifying him of price increases in December last year, when Houthi rebels in Yemen began firing rockets at cargo vessels passing though the Red Sea, en route to the Suez Canal.
As a result, many shipping companies have opted to divert their ships via the Southern tip of Africa.
“The detour is 6,000km and adds 8 to 10 days to the journey of most cargo ships. According to one shipping company, the diversion is not only longer and further, but adds a huge cost to each voyage. This is why transport costs from Asia to Europe and the US, and vice versa, have doubled,” explained Chanthy.
“For example, before the Houthi rebels disrupted the shipping lanes, a typical shipment to the US or Canada might be $3,000 to $4,000, but now the fees have risen to $8,000 or $9,000. These increases have affected exports and imports between the Kingdom and Europe, as well as North America,” he added.
He said that there was no predicting when costs would fall again, with the Red Sea conflict continuing unabated. He warned that it is likely shipping fees will rise within Asia in the near future.
“In Asia, we have not yet seen much movement in prices, but as an indirect impact of the conflict in the Middle East, I expect them to jump by 10 to 20 per cent in the near future,” he said.
Lun Yeng, secretary-general of the Cambodia Rice Federation (CRF) – the Kingdom’s apex rice industry body – acknowledged that the conflict has had an effect on rice exports to Europe.
“There are other passages to Europe, but the Red Sea, which connects to the Suez Canal, is the shortest. Transport fees have certainly changed due to the Houthi attacks,” he said.
Chan Pich, general manager of Signature of Asia, which exports milled rice to Europe and North America, expressed his concerns at rising transport costs.
He explained that a shipment that cost $700 in November rose to almost $3,000 in December, and was now close to $5,000.
“This impacts us in two ways. First, some exporters are hesitant to dispatch their goods, as they hope the costs will fall in the near future. Second, orders from importers overseas have fallen,” he said.