Lebanon's economy is on the brink of another crisis due to ongoing disruptions in Red Sea maritime transport, according to local experts. The increased shipping costs and cargo backlog have been felt by Lebanese merchants, due to geopolitical threats affecting the key trade route.
Container ships have been forced to reroute from the Suez Canal to the Cape of Good Hope, adding thousands of miles to their journeys, said Elie Zakhour, former president of the International Chamber of Navigation. This comes as a result of repeated attacks by Yemen's Houthi group on "Israel-linked vessels" since mid-December 2023, prompting global shipping giants to seek alternative routes.
In Lebanon, the cost of shipping a standard container has doubled from approximately $2,000 to $4,000 due to the Red Sea escalation. Additionally, insurance costs have surged by up to 700% due to increased "war risks" premiums.
Zakhour estimates that about 40% of Lebanon's total exports and 18% of its imports will be affected by the rerouting, impacting commodity prices in Lebanon and beyond. Lebanon primarily exports agricultural products like fruits and vegetables via the Red Sea to regional countries, and imports automobiles and digital products from Asian manufacturers.
According to Anis Abou Diab, an economist and professor at the Lebanese University, these disruptions will cause cash-flow problems for Lebanese importers if their products arrive late. This crisis will also force local farmers and industrialists to incur additional costs, affecting their global competitiveness.
Source: english.news.cn