By Fran Beyer | Wednesday, 10 January 2024 03:56 PM EST
Read more at https://www.newsmax.com/newsfront/freight-red-sea-houthi-rebels/2024/01/10/id/1149106/
Freight shipping prices will rise Jan. 15 after Iran-backed Houthi rebels attacked vessels in the Red Sea, according to a report. CNBC reported Wednesday the expected price rise comes amid longer transit times around Africa that are disrupting and delaying deliveries of products. Vessels aren’t able to come back to Asia in time, and ocean carriers are canceling sailings on short notice, both as a result of ship diversions, Honour Lane Shipping emailed clients, the news outlet reported.
The rerouted vessels are carrying items including spring clothing, footwear, home goods, electronics, patio furniture, and pool supplies.
British clothing retailer Next also recently warned of stock delays as a result of the longer ocean transit, while Ikea in December lamented its own supply chain delays, the outlet noted.
“The rerouting of vessels is leading to longer transit times and increased costs,” Jon Gold, vice president of supply chain at the National Retail Federation, told CNBC. “Unfortunately, the longer the disruptions occur, the more challenges will arise in ensuring supply chain reliability and efficiency.”
The longer voyages are also adding to the cost of freight.
MSC, the world’s largest ocean carrier, was the first shipping company to release rates for the second half of January, according to CNBC. Beginning Monday, rates for those clients will be $5,000 for West Coast routes, $6,900 for the East Coast, and $7,300 for routes to the Gulf of Mexico.
“This is really an unexpectedly huge rate increase,” HLS wrote, CNBC reported.
Vessel volume in the Suez Canal has fallen 61% to an average of 5.8 vessels per day, compared with volumes before the Houthi attacks, according to logistics data firm Project44, CNBC reported.
Egypt, which owns and operates the Suez Canal, charges between $500,000 and $600,000 per vessel transit, resulting in losses for a country already hurt by a declining tourism industry and soaring inflation.
The hikes follow an attack on Tuesday by the Houthis, the largest in the area by the militants as the three-month-long war between Israel and Hamas in Gaza spills into other parts of the Middle East.
“As most carriers currently still reroute completely anyhow, we do not see more divisions than before,” said Franziska Bietke, global sea logistics communication manager at Kuehne + Nagel, CNBC reported. “The magnitude of yesterday’s attack is likely to reinforce the global carriers’ position that the passage is too risky.”
Logistics companies are also warning clients of container shortages, which hasn’t happened to shippers since the COVID-19 pandemic, CNBC reported.
Mark Rhodes, regional director of ocean product for Asia-Pacific at Crane Worldwide Logistics, told CNBC that containers arriving in Europe through the diverted route will need to make their way back to the manufacturing hot spots in Asia.
“The container shortage remains fresh in our memories from the COVID pandemic,” Rhodes said. “The outbound leg from Asia to Europe is just the beginning of what could be more turbulent times ahead in 2024.”
Related Stories:
- US, UK Defend Against Largest Houthi Red Sea Barrage Yet
- Maersk Pauses All Red Sea Shipping After Houthi Attack
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