by Lloyd's List
31 July (Lloyd's List) - THE ongoing crisis in the Red Sea is likely to have a permanent impact on the eastern Mediterranean transhipment market, according to Malta Freeport Terminals.
Data from Lloyd’s List Intelligence indicates that containership transits through the Suez Canal have fallen by 70% since the Houthi faction in Yemen began missile and drone attacks on merchant tonnage last November.
There is no obvious end to the onslaught in sight, and it does not automatically follow that the Houthis will cease operations even a ceasefire between Israel and the Palestinians in Gaza is agreed.
With many operators deciding to serve east-west routes via the Cape of Good Hope instead, the Marsaxlokk-based facility has lost an undisclosed volume of business, a representative confirmed.
However, this has been partially offset by an increase in spot calls, which have boosted overall throughput even though the absolutely number of calls has fallen.
“In view of the continuous attacks on vessels in the Red Sea transiting through the Suez Canal, global shipping lines have been compelled to reroute their mainline services opting for a much longer alternative route, thus negatively affecting the Freeport’s operations,” the representative said.
“The Houthi attacks could trigger a long-term strategic shift in Mediterranean containerised traffic, significantly affecting port operations, infrastructure investment, and competitive dynamics.”
Shipping lines may alter routing strategies, altering market shares and operational costs. Within this scenario, the region’s maritime trade landscape could undergo profound changes, she added.
The business model of Mediterranean transhipment ports focuses on capitalising on their strategic location.
Malta Freeport is well situated at the intersection of major shipping routes connecting Europe, Asia, and Africa. This gives it proximity to key markets and allows ships using the Suez Canal and the Strait of Gibraltar to call with minimal deviation.
Boxships on the main Europe-Asia trades offloading containers for feedering elsewhere in the region comprise the mainstay of its client base.
Clients can access approximately 115 ports globally, over 50 of which the Mediterranean, through regular weekly feeder services.
Malta Freeport believes that ports of its kind play an important role in optimising shipping routes, reducing transportation costs, and enhancing global trade efficiency.
Inevitably, transhipment traffic makes up 96% of its volumes, which typically come in at just under 3m teu per annum.
Last year saw a 3.1% fall in container throughput to 2,800,000 teu. With the Houthi attacks only starting in November, this is being attributed to stalling growth in east-west trade.
“This slight decline in throughput level was mainly attributed to the challenges posed by prevailing global economic trends due to ongoing supply chain disruptions, geopolitical tensions affecting trade routes, and increased operational costs linked to the energy crisis,” the representative said.
“This resulted in a significant drop in volumes experienced in the fourth quarter of 2023.”
Another concern for MFT is the roll-out of the EU’s emissions trading scheme at the start of January, forcing vessels to pay for carbon dioxide emitted in EU waters.
All vessels above a certain cargo capacity now have to buy emissions allowances on 40% of their carbon emissions, and that threshold will rise to 100% by 2027.
In practice, that generates an incentive for operators to use ports outside the EU. Brussels has tried to plug the gap by making sure Morocco’s Tanger Med and Egypt’s Port Said East are included in the scheme, albeit at half the usual rate.
“This directive does not fully apply to non-EU ports in the Mediterranean region, placing transhipment facilities in the EU, including Malta Freeport, at a distinct competitive disadvantage,” said the representative.
“The company supports the EU in its drive towards achieving environmental sustainability. However, this directive should not risk distortions in fair competition.”
More positively, Malta Freeport is scheduled to complete the extension of its Terminal Two North Quay this year, taking the length of quay from 512 m to 688 m, while Terminal Two West Quay will be lengthened by 195 m to 313 m.
This will boost annual capacity to 4m teu, from the current 3.6m. Two additional megamax ship-to-shore cranes with an outreach of 25 containers across.
New shoreside power facilities will reduce carbon emissions from vessels in port.
Robert Yildirim’s Yilport has a 50% stake in Malta Freeport Terminals. The remaining half is owned by Terminal Link, of which CMA CGM owns 51% and China Merchant Holdings 49%.
Major customers include CMA CGM and MSC, which respectively accounted for 30% and 20% of 1,803 vessel calls in 2023, according to Lloyd’s List Intelligence data.
