Shipping companies remain tentative about returning to Red Sea trade routes despite the recent Gaza ceasefire deal.
Violence in the Red Sea over the better part of two years has disrupted global shipping and forced route changes for liners.
According to Reuters, insurance premiums for vessels navigating the Red Sea have resulted in additional costs of hundreds of thousands of dollars for a seven-day voyage for ships operating in the area.
War risk premiums for ships linked to Israel or the US were quoted between 0.6 per cent and 2 per cent of the vessel’s value, a range that has remained largely stable in recent months, Reuters reported.
Shipping, insurance, and retail industry executives reported that the risks were too high to resume voyages through the Bab al-Mandab Strait in the Red Sea, according to Reuters. This vital route serves as a gateway for exports from the Gulf and Asia to Western markets before reaching the Suez Canal.
READ: Red Sea crisis sparks hike in vessel bunching
Resuming operations for larger vessels, such as tankers transporting liquefied natural gas, would take longer due to the heightened risks associated with their flammable cargo in the event of an attack.
Norwegian shipping company Wallenius Wilhelmsen, which specialises in transporting vehicles, stated that it would not resume Red Sea voyages “until it is safe”.