Global Ocean Carriers Halt Red Sea Transits: What Shippers Need to Know

The Current Situation in the Red Sea

Ongoing attacks on commercial vessels in the Red Sea and Bab el-Mandeb Strait have prompted major ocean carriers to suspend transits through the Suez Canal route. This disruption impacts one of the world's busiest shipping lanes, crucial for vessels traveling between Asia, Europe, and the eastern United States.

As of January 24th, 2024, approximately 562 carrier vessels accounting for 7.6 million TEUs of capacity (almost 25% of global capacity) are actively diverting or have already diverted from the Suez Canal. Most major container lines are rerouting vessels around the Cape of Good Hope in southern Africa, extending transit times by 1-3 weeks.

The situation remains volatile, with continued missile and drone attacks reported on commercial ships. On January 24th, Houthi forces fired three anti-ship ballistic missiles toward a U.S.-flagged container ship in the Gulf of Aden. While two missiles were intercepted and no damage was reported, the incident highlights the ongoing risks in the region.

Impact on Global Shipping

The Red Sea crisis is having widespread effects on global supply chains:

• Extended transit times of 1-3 weeks for vessels rerouting around Africa
• Reduced effective shipping capacity due to longer voyages
• Rising freight rates, especially on Asia-Europe and Asia-US East Coast routes
• Equipment shortages emerging, particularly in Asian ports
• Schedule disruptions and port congestion as vessels bunch up
• Increased costs for fuel, insurance, and other operational expenses

Freight rates have spiked dramatically on impacted lanes. For example, spot rates from Asia to North Europe increased by over 170% between mid-December and early January. While rates stabilized somewhat in late January, they remain significantly elevated compared to pre-crisis levels.

The situation is also affecting trade lanes not directly impacted by Red Sea diversions. Carriers have pulled capacity from other routes like the Transpacific to support Asia-Europe services, leading to rate increases across many global lanes.

How FreightAmigo Can Help Shippers Navigate the Crisis

At FreightAmigo, we understand the challenges shippers face during this period of supply chain uncertainty. Our digital logistics platform offers several key solutions to help you adapt:

• Real-time visibility: Track your shipments and stay informed of any route changes or delays through our advanced tracking system.
• Flexible routing options: Compare quotes for alternative routes and modes to find the best option for your time-sensitive cargo.
• Equipment sourcing: Leverage our extensive carrier network to secure container equipment, even in constrained markets.
• Market intelligence: Access up-to-date rate information and capacity forecasts to inform your shipping decisions.
• Risk mitigation: Easily arrange cargo insurance to protect against potential losses or delays.

Our team of logistics experts is available 24/7 to help you navigate these challenges and keep your supply chain moving. We can assist in developing contingency plans, exploring alternative routing options, and optimizing your shipping strategy in this dynamic environment.

Recommendations for Shippers

Given the ongoing uncertainty, we recommend the following steps for shippers:

1. Plan ahead: Book cargo 4-6 weeks in advance to secure space, especially with Chinese New Year approaching in February.
2. Consider alternative routes: For US East Coast-bound cargo, explore options via the US West Coast with intermodal transport or limited Panama Canal capacity.
3. Be flexible: Prepare for potential delays and be ready to adjust plans as the situation evolves.
4. Communicate proactively: Keep your customers and supply chain partners informed of potential impacts.
5. Monitor closely: Stay informed on the latest developments and be prepared to make quick decisions.

By leveraging FreightAmigo's digital platform and expert support, shippers can navigate these challenges more effectively and maintain resilient supply chains despite the ongoing disruptions.

Conclusion

The Red Sea crisis presents significant challenges for global shippers, but with the right strategies and support, these obstacles can be overcome. At FreightAmigo, we are committed to providing the digital tools, market intelligence, and expert guidance needed to adapt to this evolving situation.

As the situation continues to develop, we will keep our clients informed of the latest updates and provide tailored solutions to meet your shipping needs. Together, we can navigate these turbulent waters and ensure your cargo reaches its destination safely and efficiently.

References

"Global Ocean Carriers Halt Red Sea Transits – What to Expect", FreightWaves, https://www.freightwaves.com/news/global-ocean-carriers-halt-red-sea-transits-what-to-expect