Global Supply Chains Adjust to Prolonged Red Sea Disruption

More than a year on from the onset of Red Sea shipping disruptions, a substantial share of container traffic between Asia and Europe continues to be rerouted around the Cape of Good Hope rather than through the Suez Canal, adding significant time and cost to global trade routes.

The longer journey typically adds one to two weeks to transit times, forcing retailers and manufacturers to hold more inventory as a buffer and to plan orders further in advance. Some companies have responded by diversifying suppliers across a wider range of geographies to reduce their exposure to any single route.

Freight rates spiked sharply when the disruption began and have since settled well below their peak, but remain elevated relative to pre-disruption norms as shipping lines factor in the additional fuel and time costs of the longer route.

Economists note that the episode has reinforced a broader post-pandemic trend toward supply chain resilience over pure cost efficiency, with more firms willing to pay a premium for redundancy and flexibility after several years of repeated disruption.