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Container ships continue to avoid the Red Sea for now
The situation surrounding Houthi rebels' attacks in the Red Sea has not improved yet. Last week, Maersk announced it was sailing through the Suez Canal again after receiving an agreement from Operation Prosperity Guardian. However, last weekend, MV "Maersk Hangzhou" was attacked, so they will not sail through the Red Sea until "further notice" and will thus extend the sailing break. The other shipping companies have decided to take the route via the Cape of Good Hope. This leads to an increase in container shipping costs. In addition to regular fare increases, shipping companies are introducing special surcharges. The threat in the Red Sea and the upcoming Chinese New Year both play a role in these surcharges. Meanwhile, supply and demand are so distorted that rates are rising extraordinarily. The Shanghai Freight Index shows that rates increased by over 50% in week 51 and 80% in week 52.
Major container shipping companies, including Maersk, MSC, OOCL and CMA CGM, have recently announced the introduction of surcharges. These surcharges are partly a response to attacks by Houthi rebels in the Red Sea region, forcing ships between Asia and Europe to divert via the longer and more expensive route around the Cape of Good Hope instead of through the Suez Canal. Diverting involves additional costs for shipping companies, such as fuel costs, and requires more capacity, as ships between Asia and Europe take longer to reach their final destination. Rerouting via the Cape of Good Hope results in ships spending 10 to 14 days longer underway on top of the regular sailing time. In addition to this longer transit time, several ships first waited at the Suez Canal before the choice was made to divert. Congestion should also be taken into account.
Another part of the surcharges is related to the peak season in trade between China and Europe, especially in view of the approaching Chinese New Year on Feb. 10. Traditionally, demand for container shipping increases in the run-up to this celebration, with many factories in China closing temporarily and goods being shipped en masse prior to the event.
We are closely monitoring the situation. For questions and additional information, please contact your Jordex contact person.
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