• Economics

Red Sea Tension Drives Up Shipping Costs

• By Thien Phearin
• February 8, 2024 3:10 PM

PHNOM PENH – Prolonged tension in the Red Sea, one of the world’s crucial shipping routes, will further affect sea transport as shipping prices surge, says Sin Chanthy, head of the Cambodia Logistics Association (CLA). 

Since October 2023, Yemen-based Houthis have launched attacks on cargo ships it labels as Western countries-owned traveling through the Red Sea as part of a wider regional conflict caused by the Israel-Hamas war.

The Red Sea route is the shortest way for shipping between Asia and Europe and the American continent. However, many ships have taken longer detours around Africa, taking more time and increasing the shipping cost.

CLA president Sin Chanthy said the tension has affected logistics and transportation and, if prolonged, will have a greater impact on shipping costs.

“Now the shipping from Asia to Canada to the United States or Europe is almost double the price,” he said.

He said that previously the cost of a forty-foot equivalent unit container was $4,000 but was now close to $8,000.

Chanthy said that Cambodia was no different from other countries in Asia. 

There had been a negative impact on the Cambodian economy but the crisis emerged only a few months ago and it was too early to know how bad it was. 

Companies were looking for alternatives as there was no sign of the crisis ending soon.

Chanthy added that the delivery of goods by air has been in demand. Air freight costs had increased by more than 100 percent in 2023 compared to 2022. 

Originally written in Khmer for ThmeyThmey, this article was translated by Torn Chanritheara for Cambodianess.