Recently, affected by the Red Sea crisis, merchant ships from more than 10 major shipping companies around the world have avoided the Red Sea-Suez Canal and detoured to the Cape of Good Hope in Africa. This has triggered concerns among companies about the safe delivery of goods. In order to ensure that goods can be delivered safely and on time, some companies have begun to use bypass, air transport, and combined sea and air transportation methods. This change has brought new challenges to global logistics, which requires dealing with the risk of rising sea and air freight prices. Quotations have been obtained for January, with the freight rate from China to the UK reaching US$10,000 per 40 feet.
Recently, major shipping companies have announced that various surcharges will be levied in January, including peak season surcharges (PSS). These surcharges will be added to the new FAK or contract rates, and freight rates will also skyrocket. Shippers have accused Asian-Nordic ocean carriers of “rate gouging” and can’t believe the rate levels quoted by carriers.
NVOCC, a UK-based non-vessel operating common carrier, said: “We expect rates to increase next year, but not to this level and there is clearly no room for negotiation.”
One shipper importing bulk goods from China to the UK said carriers were refusing to accept his heavy boxes, although he said one company quoted him $3,000 per 20 feet. “A month ago, it was only $435 per 20 feet,” the shipper said.
According to the latest booking quotation, the sea freight for a standard-size 40-foot container from Shanghai to the UK is US$10,000. A week ago, the freight price was only US$2,400. At the same time, truck freight prices in the Middle East have at least doubled.
Peter Sand, chief analyst at freight benchmarking company Xeneta, pointed out that although the current market freight rate has not yet reached the average level, shippers may need to pay higher fees for some urgently needed goods.
“The arrival of the Chinese New Year, combined with the rising demand in the upcoming season, makes the situation faced by all participants more tense.” “A huge freight peak is coming.”
It is also an indisputable fact that freight rates on European routes and Red Sea routes have increased several times. Alan Baer, CEO of logistics giant OL USA, pointed out that because ships need to turn in real time to avoid the risk of attacks by Houthi armed forces in Yemen, ocean carriers have made rapid adjustments A quote was requested to cover the increased cost. Compared with the changes during the epidemic, this time the adjustment is faster, and on some trade routes, freight rates have even increased by 100% to 300%.
According to data released by Kuehne + Nagel, as of Friday (December 22), 313 ships have been identified as being affected by the situation in the Red Sea. Total capacity is expected to be 4.2 million TEU. Maritime transport data company MDS Transmodal estimates the value of rerouted cargo at around $105 billion.
A spokesman for global home furnishing giant Ikea said the supply of some Ikea products may be limited due to delays caused by the situation in the Suez Canal. To cope with this situation, IKEA is evaluating other supply chain options. Meanwhile, logistics executives told reporters they are considering shipping some products by air as a possible solution.
U.S. shippers are also evaluating trans-Pacific shipping options and even looking at the Panama Canal as an alternative trade route. They are carefully analyzing the time and cost of these options to find the most suitable shipping method. Although the pressure on transportation costs is inevitably passed on to consumers in the supply chain, whether air freight or detours are used, the cost will further increase. Alan Bell mentioned that the freight rate for a standard container from India to the East Coast of the United States has soared from about US$2,000 to US$7,000 in just 30 days, which may mean that the price increases in some links take advantage of geopolitical factors. The American Apparel and Footwear Association (AAFA) is closely monitoring developments in the Red Sea situation. Steve Lamar, president and CEO of the association, said that since the United States relies on imports for 98% of its apparel, ensuring safe and affordable transportation is critical.
If you’re considering expanding into new markets, our ocean freight services can help. As an experienced NVOCC, we will help you every step of the way with the latest customs expertise, visibility and communication capabilities.
The Ultimate Guide to Amazon FBA Sourcing Agent Service: Do You Really Need It?
Amazon FBA Sourcing Agent Service
what strategy would most help an ecommerce business drive traffic to their website
what strategy would most help an ecommerce business drive traffic to their website
