INSA: no impact on Indonesia’s shipping amid Red Sea Crisis and Panama Canal Drought

According to INSA, none of the vessels of Indonesia navigate these routes, and thus the surge in international shipping costs is not a concern for Indonesia’s maritime industry.

The Indonesian National Shipowners Association (INSA) has declared that the recent Red Sea crisis and the drought affecting the Panama Canal have not posed a threat to shipping companies. According to INSA, none of the vessels of Indonesia navigate these routes, and thus the surge in international shipping costs is not a concern for Indonesia’s maritime industry.

The Red Sea crisis, sparked by geopolitical tensions in the region, has led to increased risks and costs for vessels passing through the area. As quoted by Kontan on Monday Carmelita Hartoto, the INSA chairperson stated, “There is no impact to national shipping because Indonesian vessels do not navigate in the conflict area.” The Panama Canal, a vital waterway for global trade, has been scuffling with a drought that has necessitated restrictions on the draft of ships passing through. These obstructions have contributed to a rise in international shipping costs, impacting trade routes that rely on these passages. The rates were pushed up 55 to 63 per cent for freight shipping between Asia and Europe.

Since early January, Yemen’s Houthi rebels have been attacking commercial vessels with alleged Israel links in the major trade waterway, and the United States and British forces launched counter-air strikes targeting Houthi-controlled locations. The attacks have ignited top international shipping companies to not take the Suez Canal route, which is a shortcut through Egyptian waters that accounts for global maritime traffic for 12 per cent.

The chairperson of INSA continued by saying, “So international shipping must avoid the Suez and go via the South African route. This does not affect national shipping, because we do not head to Europe.”

As reported by Reuters, Denmark’s Maersk and Germany’s Hapag-Lloyd like shipping giants have rerouted their vessels on longer journeys around the Cape of Good Hope of South Africa for the future. This journey is not only longer but also expensive. The extra cost of the fuel is around US$1 million and the time adds up to around 10 days between Asia to Northern Europe.

The chairperson of INSA explained that operators would rather wait in line than take longer expensive routes. She also reassured that this would not impact Indonesia severely.