Red Sea Crisis Returns: Nigerian Shippers Brace for a Wave of Vessel Rerouting and Surging Freight Rates

Source: Maritime-Executive

Nigerian shippers are bracing for a surge in freight costs and delivery delays. This stems from industry giants simultaneously rerouting vessels away from the Red Sea and Suez Canal - the arterial route connecting Nigerian ports to Asia - amid escalating tensions in the Middle East.

Major Carriers Abruptly Reverse Strategic Course

Just days after CMA CGM announced plans to fully restore operations through the Suez Canal in Q2 2026, the world's third-largest container line abruptly retracted its decision. The carrier announced the withdrawal of key Asia-Europe services, diverting them around Africa's Cape of Good Hope.

Explaining the abandonment of this shortest route, a CMA CGM representative cited: “The complex and uncertain international context.”

The company did not provide a specific timeline for reconsidering this decision.

Meanwhile, despite having confirmed a return structure to the Red Sea route just weeks ago, Maersk has also reversed its decision. The carrier continues to suspend transit operations through the Red Sea / Bab el-Mandeb Strait and is routing vessels around Cape Town, citing: “deteriorating security situation” and “unforeseen constraints” in the region.

Many other carriers have quickly followed suit.

The emergency moves by shipping lines occurred shortly after the US and Israel launched strikes on key Iranian facilities, sparking bloody retaliatory actions across the region.

Mounting Pressure on Supply Chains and Exporters

The continuous cancellations and sudden rerouting are forecast to drive freight rates higher, making delivery schedules unpredictable for shippers and thereby directly threatening the competitiveness of Nigerian goods in critical foreign markets.

Mr. Aminu Umar, President of the Nigerian Chamber of Shipping, shared with BusinessDay:

“We are going to see longer days of cargo arrivals, and a very high freight rate coming up from tomorrow.”

The traditional route via the Suez Canal and Red Sea to Asia is the shortest, with a transit time of 30 to 35 days, saving about two weeks of fuel and operating costs compared to the alternative. Diverting around Africa's Cape of Good Hope adds weeks to the schedule, along with thousands of dollars in fuel and handling costs per shipment.

Nigerian exporters are particularly vulnerable as transport costs already consume a large portion of their profit margins. Mr. Kola Awe, a Nigerian commodity exporter with shipments bound for Asia, stated: “Freight is already on the high side.”

Elaborating on the cost structure, he explained: “Logistics is between 25 to 26 to 30 percent of our FOB value. So we’re on the high side.”

Without a national shipping fleet or adequate investment in the domestic shipping industry, Nigerian cargo is entirely dependent on foreign carriers - who will pass the increased costs directly onto the shippers. This domino effect of rising costs threatens Nigeria's position in Asian markets, where competition from other suppliers is fierce.

Bracing for the impending impact, Mr. Awe candidly noted:

“[The shipping companies] always take advantage. They charge more. If they charge more, nobody, no shipper has any other alternative but to pay. Naturally, that affects our competitiveness,”

Disruption Risks from the Oil Market to Commercial Contracts

The disruption is rippling across the maritime sector. Industry leaders report that rates for Very Large Crude Carriers (VLCCs) have “skyrocketed” and warn that container freight rates will follow a similar trajectory as vessels pile up in the Arabian Sea and Indian Ocean, unable to unload via the blockaded route.

Mr. Umar warned of the knock-on effect: “If oil price jumps, which is most likely, there is no way freight will not go up, because bunker prices will also rise,” emphasizing, “It’s going to be a huge disruption.”

The global benchmark oil price hit an 8-month high of $73 a barrel last Friday. Brent crude is expected to start the new week at $80 a barrel and is likely to continue rising.

The situation could be even worse for export goods destined for Gulf countries and beyond. Buyers facing prolonged delays may invoke force majeure clauses in their contracts. Mr. Umar explained: “which means they will have to suspend the contract pending when the matters are clear.”

When this happens, exporters will be stuck with cargo idling in warehouses or on ships.

“If the goods are perishable goods that are not going to withstand long, then the shipper is going to lose almost all their goods.”

He bitterly concluded regarding this prospect: “We all lose. Everybody loses.” 

 
An Uncertain Future

Insurance could offer some protection, but only if exporters have adequate coverage. Those without comprehensive insurance policies will face catastrophic losses.

“Many people will lose a lot of money,” Mr. Umar said. “Economically, this is something that is going to make people suffer a lot.”

The tangible impact on Nigerian shippers is expected to become clearer this week as shipping companies finalize their routing decisions.

“It’s something that nobody can predict, the likely outcomes. But when the markets open tomorrow, we will start to see the effects,” Mr. Umar concluded.

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Source: Phaata.com (According to BusinessDay)

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