Detour is a foregone conclusion! Freight prices soar! Delays are frequent!

The shipping market has continued to be sluggish since 2023. In the past few months, shipping companies have been trying to push up freight rates, but they have no chance. Now the Houthis armed forces have brought the opportunity to raise prices to their doorstep.

Over the past month, affected by the "Red Sea Crisis", shipping rates have risen sharply, and detours have also caused weeks-long delays, making international traders miserable.

The Red Sea is an important waterway to the Suez Canal, a must-stop for some trade routes to Western Europe and the United States. About one-third of global container cargo and about 30% of cargo destined for U.S. East Coast ports pass through the Suez Canal. 60% of China’s exports to the EU pass through the Suez Canal.

Since early December, the top 10 container ship operators have rerouted about $200 billion in cargo that would otherwise have passed through the Red Sea.

CMA CGM has announced a significant increase in freight rates from Asia to the Mediterranean. Among them, the freight rate for the route from Asia to the Western Mediterranean will increase from US$2,000/TEU to US$3,000/FEU on January 1, 2024. The price will be raised to US$3,500/TEU (20-foot container) and US$6,000/FEU on January 15, 2024, with an increase of up to 100%.

Currently, container freight rates from Asia to Northern Europe have more than doubled, with freight rates exceeding US$4,000 per 40-foot container and US$5,175 per 40-foot container from Asia to the Mediterranean.

Some shipping companies have even announced that from mid-January, the freight rate per 40-foot container transported in the Mediterranean will exceed the US$6,000 mark, and the surcharge per container will range from US$500 to US$2,700, pushing up the overall freight rate. rise.

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Not only European and continental routes, but other routes are also "following the trend" and rising. On January 5, the Shanghai Shipping Exchange, which updates the "China Export Container Shipping Market Weekly Report" every week, released the Shanghai Export Container Comprehensive Freight Index at 1896.65 points, an increase of 7.8% from the previous period (last week, the same below).

Specifically, in terms of North American routes, on January 5, the market freight rates (sea freight and sea freight surcharges) exported from Shanghai Port to the basic ports in the West and East United States were US$2,775/FEU and US$3,931/FEU respectively, an increase of 8.7% from the previous period. %, 10.5%, "The transportation demand on North American routes is generally stable, and the relationship between supply and demand is good. Driven by the increase in freight rates on other routes, booking prices in the spot market continue to rise this week."

Regarding the Persian Gulf route, the Shanghai Shipping Exchange said that under the influence of tensions in the Red Sea region, market freight rates have continued to rise recently. On January 5, the market freight rate (shipping and shipping surcharges) exported from Shanghai Port to the basic ports of the Persian Gulf was US$2,338/TEU, an increase of 14.3% from the previous period.

Nathan Strang, director of ocean freight for Flexport, a freight forwarding company based in San Francisco, California, said that one customer shipping to the Port of New Orleans found that the import time doubled to 60 days after the company's cargo transportation route was changed. "How do you tell your end customers when their goods are going to arrive and when they can be put on the shelves?" he said.