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Since the end of 2023, major carriers to decide to suspend voyages through the Suez Canal due to ongoing attacks led by Houthi rebels in the Red Sea. The increased transit times between Asia and Europe via the Cape of Good Hope have caused operational disruptions in Europe and the imposition of surcharges and rising freight rates dramatically increased the cost of international sea freight.

This week, Drewry’s World Container Index reached $4,984 per 40ft for the Asia-North Europe route component , while Asia-Mediterranean rates were around $6,365 per 40ft. Overall, spot rates for the two trade lanes are up 186% and 129% respectively on the same week of last year, reflecting the crisis-induced huge rate hikes of the past few weeks. This freight rate surge also spread to other trade lanes, but not to the same extent. It has also been reported by the Loadstar that some customers were pushed by carriers onto the spot market to take advantage of the most profitable rates. ShippingWatch noted that rates are expected to rise further in February, but may fall again following Chinese New Year, a period where demand for maritime transport is usually lower.

The rerouting of most of the ships and the subsequent delays currently leads to expected congestion in European ports and a capacity crunch both in Asia and Europe, which is expected to deepen further in the run up to Chinese New Year. In addition, the prolonged rerouting of ships caused an equipment shortage in Europe for exports driven by the displacement of empty containers, which is expected to widespread notably to Asia in the coming weeks.

The operational difficulties are more visible in the ports of the Mediterranean Sea, dramatically affected by the rerouting of ships via the Atlantic Ocean: The Port of Piraeus (Greece) is experiencing up to 20 days delay with more than 200,000 containers not yet having reached the port. Some carriers such as Maersk recently announced that the ports of Algeciras and Tangiers will be used for onward connections to Northern Europe and the Mediterranean, with feeder services for Mediterranean ports. While the decision may compensate for the capacity loss due to extra transit times between Asia and Europe, the transhipment of cargo may lead to operational difficulties for their customers in the Mediterranean Sea, and overall reducing the number of their direct connections.

While recognising the exceptional situation faced by maritime carriers, CLECAT reiterates its call on carriers to exercise care in the imposition of surcharges and freight hikes, to ensure it only covers the extra costs incurred by the exceptional situation, and that they are applied on affected sea routes.

Source: Drewry, The Loadstar, ShippingWatch, SeaTrade Maritime News