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Red Sea Shipping Workarounds Add Costs, Delays for Suppliers, Retailers 

The Container ship "Maersk Bratan" is discharged at the terminals of HHLA (Hamburg Port Logistics Inc) in Hamburg on June 22, 2022. (AFP)
The Container ship "Maersk Bratan" is discharged at the terminals of HHLA (Hamburg Port Logistics Inc) in Hamburg on June 22, 2022. (AFP)
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Red Sea Shipping Workarounds Add Costs, Delays for Suppliers, Retailers 

The Container ship "Maersk Bratan" is discharged at the terminals of HHLA (Hamburg Port Logistics Inc) in Hamburg on June 22, 2022. (AFP)
The Container ship "Maersk Bratan" is discharged at the terminals of HHLA (Hamburg Port Logistics Inc) in Hamburg on June 22, 2022. (AFP)

Toymaker Basic Fun's team that oversees ocean shipments of Tonka trucks and Care Bears for Walmart and other retailers is racing to reroute cargo away from the Suez Canal following militant attacks on vessels in the Red Sea.

Suppliers for the likes of IKEA, Home Depot, Amazon and retailers around the world are doing the same as businesses grapple with the biggest shipping upheaval since the COVID-19 pandemic threw global supply chains into disarray, sources in the logistics industry said.

Florida-based Basic Fun usually ships all Europe-bound toys from its China factories via the Suez Canal, the quickest way to move goods between those geographies, CEO Jay Foreman said in a telephone interview from his Hong Kong office.

That trade route is used by roughly one-third of global container ship cargo, and re-directing ships around the southern tip of Africa is expected to cost up to $1 million extra in fuel for every round trip between Asia and Northern Europe.

Yemeni Houthis' drone and missile attacks in the Red Sea to show their support for Palestinian Islamist group Hamas fighting Israel in Gaza have upended shipping plans.

Basic Fun is now working through the holidays to send toys from China to ports in the UK and Rotterdam via the longer route.

It is also diverting some goods bound for ports on the US East Coast from the Suez Canal to the drought-choked Panama Canal, while switching others to the West Coast via the direct route across the Pacific Ocean.

"It's just going to take longer and it's going to cost more," said Foreman, who added that rates for some China-UK freight have more than doubled to around $4,400 per container since the Israel-Hamas conflict began in October.

The Suez Canal situation remains fast changing, and shippers Maersk and CMA CGM are moving to resume voyages with military escorts through the Red Sea.

The biggest impact likely will come over the next six weeks, said Michael Aldwell, executive vice president of sea logistics for Switzerland's Kuehne + Nagel

"You can't flick a switch" and reorganize global shipping, said Aldwell, who expects the diversions to cause a shortage of vessel space, strand empty containers needed for China exports in wrong places and send short-term transport price indexes sharply higher.

According to estimates from freight platform Xeneta, it costs $2,320 to ship a 40-foot equivalent unit (FEU) container from the Far East to the Mediterranean "post escalation" versus $1,865 per FEU in early December. It costs $1,625 to ship an FEU from China to the United Kingdom "post escalation" versus $1,425 per FEU in early December.

These rates do not include "extra ordinary" risk surcharges and "Emergency Recovery Cost" that can be between $400 and $2,000 per FEU, Peter Sand, chief analyst at Xeneta, said.

Scramble for space

As of Wednesday, nearly 20% of the global container fleet - or 364 hulking container vessels capable of carrying just over 2.5 million full-sized containers - had been set on a new course due to the Red Sea attacks, according to Kuehne + Nagel data.

Mitsui O.S.K. Lines and Nippon Yusen, Japan's largest shipping companies, said their vessels with links to Israel were avoiding the Red Sea area and both companies were monitoring the situation carefully for next steps.

Vessel owners already have begun rationing the less expensive, contract-rate space they reserve for customers, said Anders Schulze, head of the ocean business at digital freight forwarder Flexport.

For example, he said, a customer who delivers five containers a month versus the 10 promised in their contract may only get five containers at contract rates. The remainder would be subject to expensive spot market rates.

This has set off a scramble to reserve space ahead of the early February deadline to get goods out of China before factories there close for the extended Lunar New Year celebrations, logistics experts said.

"Every single booking (out of China) now needs to be reconfirmed. The dates could change, the routing may change," said Alan Baer, CEO of OL USA, which handles freight shipments for clients. OL has contracts with ship owners and is part of the rush to secure spots on ships.

Small shippers are most at risk of being elbowed out.

Marco Castelli, who has an import/export business in Shanghai, has been trying to rebook three containers of Chinese-made machinery components bound for Italy after the shipments were cancelled due to the crisis.

"Transfer my situation to a large corporation and you get what's going on," he said.

Foreman at Basic Fun, which plans to have about 40 containers on the water before the Lunar New Year, said the company's contracts with customers don't include a way to recover the extra expense. "The price is fixed. (Most suppliers) are going to have to eat those costs."

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Business

Saudi Aramco Weighs Global Oil Storage Facilities to Boost Energy Security

The Public Investment Fund governor addresses attendees at the summit in Rome, Italy. (Asharq Al-Awsat)
The Public Investment Fund governor addresses attendees at the summit in Rome, Italy. (Asharq Al-Awsat)
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Saudi Aramco Weighs Global Oil Storage Facilities to Boost Energy Security

The Public Investment Fund governor addresses attendees at the summit in Rome, Italy. (Asharq Al-Awsat)
The Public Investment Fund governor addresses attendees at the summit in Rome, Italy. (Asharq Al-Awsat)

Saudi Arabia laid out a new strategy in Rome to strengthen global supply chains and build a broader partnership model with Europe, seeking to move beyond current geopolitical pressures and deepen economic ties across regions.

Public Investment Fund Governor and Saudi Aramco Chairman Yasir Al-Rumayyan said Aramco was studying plans to establish additional oil storage facilities in strategic locations worldwide to strengthen energy security.

At the same time, he said the PIF was preparing about 140 new investment opportunities for European partners worth 10.4 billion euros by 2030, after its investments helped support European GDP by $80.6 billion and create 160,000 jobs.

The targets came as Riyadh activated 41 contingency and business continuity plans to address the fallout from the closure of the Strait of Hormuz and Bab al-Mandab and secure shipping and air traffic.

Italian Prime Minister Giorgia Meloni called for European-Gulf relations to move toward an untapped strategic integration linking three continents, while Saudi Arabia’s tourism sector continued to show resilience, supported by domestic and religious tourism despite regional pressures.

The remarks came during al-Rumayyan’s participation in a high-level panel at the FII PRIORITY Europe 2026 summit, affiliated with the Future Investment Initiative Institute, held in the Italian capital.

Al-Rumayyan said Saudi Aramco already owns vital oil storage facilities in several major global markets, particularly in Asia, South Korea and Japan. He said the company was now seriously studying additional storage facilities in different regions to help stabilize markets and protect supply lines from sudden shocks.

The Aramco chairman said recent crises had underscored the importance of long-term planning. The company, he said, maintained continuity in more than 99% of its operations during recent periods of tension and restarted facilities previously hit by missile attacks in record time, reflecting the efficiency of its infrastructure and the resilience of its supply chains.

On partnership with Europe, al-Rumayyan said the PIF planned to offer about 140 new investment opportunities to expand cooperation with European partners. The opportunities linked to joint projects are worth a total of 10.4 billion euros ($11.97 billion) and extend through 2030, he said.

He also pointed to regulatory and legal challenges that have slowed the expansion of Saudi investments in Europe and affected major companies such as Aramco, SABIC and the sovereign wealth fund.

Some rules, he said, not only limit new capital flows but also threaten the sustainability of existing projects. Still, he said European policymakers and regulators were aware of the obstacles, raising hopes for better solutions in the coming period.

On the wider energy transition, al-Rumayyan called for “energy realism,” saying new and renewable energy sources were an important strategic addition but not a full replacement for oil and gas.

Vital industries such as petrochemicals, fertilizers and food production still depend on fossil fuels, he said, while global energy demand is rising with the rapid expansion of artificial intelligence applications and data centers.

Europe and the Gulf

Meloni said the next phase required Europe and Gulf states to move toward a deeper relationship based on strategic partnership and economic integration. The two sides, she said, have major potential to link three continents and expand trade, energy flows and investment.

Speaking at the FII PRIORITY Europe 2026 summit in Rome on Thursday, Meloni said Europe needed to strengthen its independence and industrial and technological capabilities, while cooperation with the Gulf offered an opportunity to build a shared path that supports global stability and growth.

She said strengthening cooperation between Europe and Gulf states was a priority for the next phase, adding that the partnership had significant untapped potential and could become a decisive bridge between West and East, and between Africa and Asia.

Meloni said Italy intended to play a leading role in that effort as a gateway to Europe and a natural hub for energy, logistics and trade in the Mediterranean.

Europe and the Gulf, she said, could together offer a strategic cooperation model that can be replicated and expanded, turning energy, trade, infrastructure and connectivity networks into sources of stability rather than vulnerability.

Treaties of Rome

Meloni said the choice of Rome for the summit carried special significance. The city hosted the signing of the Treaties of Rome in 1957, which laid the foundations of today’s European Union. As the 70th anniversary of those treaties approaches, she said Europeans should reflect on the Europe they want and need to build.

She said that vision was aligned with the Future Investment Initiative’s role as a global agenda bringing together ideas, capital, technology and practical projects to build the future. She voiced hope that Rome would become the initiative’s permanent European stop, where results are measured, progress is reviewed and new priorities are set jointly.

Hormuz crisis

Saudi Transport and Logistics Services Minister Saleh al-Jasser said the current Strait of Hormuz crisis had required countermeasures, prompting Riyadh to activate 41 business continuity and emergency plans that had already been prepared and tested. That readiness, he said, allowed the kingdom to respond quickly from the earliest days of the crisis.

Speaking at the summit, al-Jasser said the region was facing difficult conditions, but Saudi Arabia was ready to address the developments. He cited a 2013 experience when the kingdom faced challenges in the Red Sea and had to redirect its trade eastward toward the Arabian Gulf, while protecting trade flows and preserving supply chain resilience.

Al-Jasser said the kingdom helped manage disrupted flights and evacuate passengers who had landed at different airports. It also rerouted ships bound for ports in the Eastern Province to ports in the western region.

The minister said the challenges were not limited to the closure of the Strait of Hormuz but also included ongoing difficulties in Bab al-Mandeb.

Some international shipping companies, he said, were hesitant to cross, requiring coordination, information sharing and a greater role for the private sector. Since the start of the current crisis, more than 23 new shipping services have been launched in coordination with the private sector, he said.

Saudi tourism developments

Saudi Tourism Minister Ahmed al-Khateeb said domestic tourism represents between 60% and 65% of total tourism activity in the kingdom, making it a key source of balance and stability during periods of disruption to international travel.

Strong local demand, he said, helped keep Saudi Arabia’s tourism sector moving, particularly during seasons and holidays when domestic destinations reach full bookings. That demand strengthened the sector’s ability to withstand external shocks.

Al-Khateeb said the global and Saudi tourism sectors had faced pressure in recent months from geopolitical tensions, higher travel costs and fluctuations in air traffic. Even so, he said the system had shown an ability to recover and maintain relative stability.

Global tourism has fully recovered from the fallout of the coronavirus pandemic, he said, with the number of travelers worldwide reaching about 1.5 billion last year and total spending hitting about $2.2 trillion. Yet travelers still represent only about 20% of the world’s population, he said, pointing to significant room for growth.

In Saudi Arabia, he said, the kingdom received about 123 million visitors in the previous year. Tourism now accounts for 5.2% of GDP, with a strategic target to raise that share to 10%.

Al-Khateeb said the sector has created about 1 million jobs since the launch of tourism transformation programs, driven by expanding investment in destinations, infrastructure and related services.

“The start of this year was strong for Saudi Arabia and Gulf states, before tourism movement was affected by regional tensions, higher fuel costs and the cancellation of a number of flights, which affected demand levels and travel costs,” he said.

Despite those pressures, he said the kingdom ended the first five months of the year with positive performance and only a slight decline of about 5% to 6% compared with the same period last year. He described that as a “resilient” performance under global conditions.

Al-Khateeb said religious tourism remains a core pillar of stability, as Saudi Arabia hosts the Two Holy Mosques, ensuring a steady flow of visitors throughout the year for Hajj and Umrah.

Former president of the Future Investment Initiative Institute Richard Attias said Europe was at a turning point as the world undergoes rapid and unprecedented change.

According to Attias, artificial intelligence is reshaping industries, capital flows are shifting, energy systems are being redrawn, supply chains are being restructured, geopolitical balances are changing and new global centers are emerging at an exceptional pace.

Business

Kuwait Says All Force Majeure Issued During War Lifted

This photograph shows the conjunction of Jupiter and Venus over the skyline of Kuwait City on June 9, 2026. (Photo by YASSER AL-ZAYYAT / AFP)
This photograph shows the conjunction of Jupiter and Venus over the skyline of Kuwait City on June 9, 2026. (Photo by YASSER AL-ZAYYAT / AFP)
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Kuwait Says All Force Majeure Issued During War Lifted

This photograph shows the conjunction of Jupiter and Venus over the skyline of Kuwait City on June 9, 2026. (Photo by YASSER AL-ZAYYAT / AFP)
This photograph shows the conjunction of Jupiter and Venus over the skyline of Kuwait City on June 9, 2026. (Photo by YASSER AL-ZAYYAT / AFP)

Kuwait's Petroleum Corporation said on Thursday that all force majeure notices issued during the war have been lifted ⁠with immediate effect, ⁠government communication center reported on X.

Kuwait's oil ⁠production would increase to 2 million barrels per day within a week coinciding with the opening of Strait ⁠of Hormuz ⁠and resumption of commercial shipping, KPC added.

Business

Syrian Petroleum Company to Asharq Al-Awsat: Syria to Receive 56% Share of US Gas Development Deal

During the signing of the agreement between the Syrian Petroleum Company and US firms ConocoPhillips and Novaterra Energy. (SANA)
During the signing of the agreement between the Syrian Petroleum Company and US firms ConocoPhillips and Novaterra Energy. (SANA)
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Syrian Petroleum Company to Asharq Al-Awsat: Syria to Receive 56% Share of US Gas Development Deal

During the signing of the agreement between the Syrian Petroleum Company and US firms ConocoPhillips and Novaterra Energy. (SANA)
During the signing of the agreement between the Syrian Petroleum Company and US firms ConocoPhillips and Novaterra Energy. (SANA)

Mohammad Nour Al-Ahdab, Director of Media Relations at the state-owned Syrian Petroleum Company (SPC), revealed on Thursday that under the contract signed with US companies ConocoPhillips and Novaterra Energy to develop and increase production from Syria’s gas fields, the Syrian side will receive a 56 percent share under the agreement, while the two investing companies will hold the remaining 44 percent.

Al-Ahdab told Asharq Al-Awsat that the arrangement is “favorable for Syria, particularly since gas-development contracts are typically structured close to a 50-50 split because of the scale of investment, technical and operational risks, and the nature of rehabilitation and production activities.”

He added: “What matters most to us is that the contract was designed to safeguard the national interest and deliver clear economic and technical returns through increased domestic production, stronger energy security, a gradual reduction in imports, and the transfer of expertise and technology to Syrian personnel.”

In what represents the most significant strategic breakthrough in economic and political relations between Damascus and Washington since the fall of the regime of Bashar al-Assad in late 2024, SPC on Tuesday signed a major implementation agreement with ConocoPhillips and Novaterra Energy to develop gas fields and increase production.

The move marks the country’s first major US energy deal in years and serves as a tangible indication of the beginning of a phase of “full-scale implementation,” supported by US President Donald Trump’s decision to lift sanctions in July 2025.

The contract follows earlier US initiatives launched at the beginning of 2026 through memoranda of understanding signed by other companies, including Chevron for offshore exploration and HKN Energy for the onshore Rmeilan fields.

However, the ConocoPhillips agreement stands out as the largest binding implementation contract aimed at developing the domestic gas sector, backed by Gulf and European partnerships and financing arrangements intended to help end the country’s severe energy crisis.

Al-Ahdab described the agreement as an important milestone in the rehabilitation and development of Syria’s gas sector because it moves cooperation with international partners beyond the memorandum-of-understanding stage and into formal contractual commitments and practical implementation.

“The importance of the agreement stems from several factors,” he said. “First, it targets the development of a number of existing gas fields and an increase in their production, which will support the energy system, particularly gas supplies needed for the electricity sector and other vital industries. Second, it opens the door to the introduction of international expertise and technologies in assessment, rehabilitation, processing, and operational-efficiency enhancement.”

According to Al-Ahdab, the agreement also reflects a clear commitment by SPC and the Ministry of Energy to building strategic partnerships capable of accelerating the recovery of the energy sector, gradually reducing reliance on imported gas, and preserving the role of Syrian professionals by empowering them through training and knowledge transfer.

“For us, this is not merely a production agreement,” he added. “It is part of a broader vision to rebuild the energy sector on sustainable technical and economic foundations in a manner that serves the national economy and meets citizens’ needs over the medium and long term.”

Al-Ahdab said the contract includes implementation phases related to the development of existing fields, the rehabilitation of operational infrastructure, and the gradual increase of gas production.

“There are also subsequent phases linked to additional development and exploration activities, subject to technical and contractual approvals agreed upon by the parties,” he said.

He added that the duration of the contract “is tied to the nature of the technical work and the various stages of implementation and production. Details that can be officially disclosed will be announced through the approved channels.”