The naval blockade in the Red Sea, a consequence of heightened tensions tied to Israel’s Gaza conflict that began late in 2023, is increasingly causing congestion of empty containers at Israeli ports and regional hubs such as Valencia in the Western Mediterranean. As shipping companies reroute transoceanic cargo to avoid strikes through the Gulf and Suez routes, vessels traverse longer paths via the Cape of Good Hope, extending journeys by up to two weeks. This shift has intensified the flow of empty containers toward European terminals as operators adapt to the new maritime corridors and safety considerations on the old routes in the East and Middle East.
According to the Port Authority of Valencia, December saw a 13% rise in container counts compared with December 2022. Alfredo Soler, head of the Valencia logistics association Propeller Valencia, cautions that an uptick in empty containers is likely to persist as Mediterranean ports adjust to the altered sea lanes. He notes that the near-term outlook includes some volatility, but he expects the system to stabilise and gradually return to normal as networks reconfigure and capacity aligns with demand.
Experts warn that the disruption will persist and that new routes could remain longer and costlier. Maritime transport costs are likely to rise, potentially affecting export demand and productivity for certain companies. Analysts also suggest that the Valencian Community and broader Spain may see large container ships reduce their exploration of parts of the Eastern Mediterranean, with a corresponding drop in connectivity across the region. Such shifts could impact exporters in Spain by raising the cost of goods imported from Asia.
Foreign trade costs
Evidence of these dynamics can be seen in Valencia’s trade activity through early 2024. The Valencia Containerized Freight Index (VCFI) remained around elevated levels, indicating continued pressure on both exports and imports despite the markets’ attempts to stabilize.
Export cargo from the Grao facility shows momentum
Export freight from the Grao facility rose for the third consecutive month, posting a substantial increase in January. The VCFI has climbed significantly since its long-term upward trend began in January 2018. The index signals the strongest movements in export freight costs, especially toward the Mediterranean and East Asia, with notable gains toward the United States and Canada as well.
Emissions-related costs are another factor influencing the freight market. The latest VCFI report highlights how rising operating costs tied to Middle East tensions have driven freight rates higher. Shipping lines have restructured routes to avoid high-risk corridors, and the introduction of the European Union Emissions Trading System (EU ETS) from 2024 adds new charges for activities at EU ports. Together, these changes raise the overall cost structure of long-haul voyages and port calls across transoceanic routes.