The recent crisis in the Red Sea has significantly impacted global logistics, with shipping companies like Maersk rerouting vessels and leading to a surge in ocean and air freight prices. This development comes after several years of inflationary pressures and disruptions due to the COVID-19 pandemic.
On Thursday, logistics managers reported a dramatic increase in ocean freight rates, with costs for a 40-foot container from Shanghai to the U.K. soaring to $10,000, a substantial rise from last week's rates of $1,900 to $2,400. Additionally, truck rates in the Middle East have more than doubled.
Alan Baer, CEO of OL USA, highlighted the abrupt nature of these price hikes, contrasting them with the gradual increase during the pandemic. He noted that the current surge in freight rates, ranging from 100 to 300 percent in certain trade lanes, seems to be driven by factors beyond simple supply and demand dynamics.
As of Thursday, 158 vessels, carrying over 2.1 million cargo containers valued at approximately $105 billion, have diverted from the Red Sea. This situation poses significant risks to the global supply chain, affecting companies like IKEA and Danone, who have acknowledged potential impacts on product availability and supply chain stability.
Logistics managers are exploring options for "stranded" cargo, including air transport for selected products and alternative trade routes such as the TransPacific to the West Coast or the Panama Canal. Ports like Dubai and Aqaba are being considered as Middle East alternatives.
Maersk and other ocean carriers are working to adapt quickly to these changes. For cargo in ports where rerouted ships cannot call, smaller feeder vessels are being deployed to transfer containers to larger ports for continuation of their ocean journey.
Air freight prices have also spiked due to the shift from ocean to air transport, particularly for European shippers who depend heavily on the Suez Canal. According to Judah Levine of Freightos, rates for China to North Europe shipments have increased by 13% this week.
The severity of the impact on the global supply chain depends on the duration of the rerouting, with a potential inflationary impact if the situation persists beyond a month. Retailers and the Federal Maritime Commission are closely monitoring the situation, with concerns about the additional costs and delays affecting the delivery and cost of goods.