Red Sea Crisis: Impact on Europe-Asia Trade

The escalation of conflict in the Red Sea has materially disrupted Asia–Europe trade flows by impairing one of the world’s most critical maritime corridors. Repeated attacks on commercial vessels have forced shipping lines to reroute around the Cape of Good Hope, resulting in longer transit times, higher freight and insurance costs, and tighter vessel availability. These disruptions have increased landed costs for commodities and manufactured goods, pressured supply chains, and contributed to volatility in global trade and logistics markets, with knock-on effects for exporters, importers, and end-consumers across both regions. We see the crisis as more than a transitory shock, with sustained implications for freight rate volatility and a renewed strategic focus by corporates on route diversification, inventory buffers, and near-/friend-shoring over the medium term.