14 Jul The Red Sea continues to reverberate across the supply chain
The complexity of the situation in the Red Sea, a critical route for approximately 30% of the world’s container traffic, has continued to cause disruption on a global scale.
Furthermore, the combination of the challenges across both the Red Sea and Suez Canal over the recent period has seen the continued diversion of commercial vessels from these traditional trade routes towards alternate ones that take longer to traverse.
As these challenging conditions continue, it has become clear that the traditional peak season, which usually occurs during July-October has arrived early, as shippers are already booking slots due to low availability of vessels and containers.
With continued diversions, the subsequent ramifications are becoming ever more amplified across the supply chain landscape as the industry struggles with bottlenecks, vessel bunching, decreased schedule reliability, equipment and capacity shortages as well as increasing freight rates and other charges.
Congestion
Fluctuating services configurations has seen congestion building at some ports as a combination of unexpected events and higher volumes increases pressure on infrastructure and the inland operations whose ability to cope with changeable volumes is causing backlogs and congestion in certain regions. In particular, it appears that congestion is widespread across ports east of Suez, as far as Ningbo, Shanghai, Singapore, Port Klang and Dubai.
Schedule reliability
After seeing widespread improvement throughout 2023, vessel schedule reliability declined in the first quarter of this year, with on-time performance falling from an average of 35% in 2023 to 27% in 2024. Whilst schedule reliability is still far from pre-pandemic levels, early indicators show a potential 22% on-time performance for the upcoming quarter, reflecting a potentially considerable decline in Q2 of 2024.
Rates
Container spot rates have continued to increase on the east-west trades with double-digit weekly gains on the Asia-Europe and Asia-North America trade routes. The ascent steepened over recent weeks, with Drewry’s WCI Shanghai-Rotterdam leg rising 20% week-on-week to finish at $4,999 per 40ft. Meanwhile, on the WCI’s Shanghai-Genoa leg, spot rates rose 15% to $5,494 per 40ft.
Spot ocean freight rates from the Far East to the US increased between 36% to 41% month over month, and ocean carriers increased general rate increases by approximately 140% and announced peak season surcharges (PSSs). It is speculated that ocean freight rate inflation might not show signs of easing until after Chinese New Year 2025 with the potential that rates may reach Covid-era peaks.
FOLLOW US FOR THE LATEST NEWS!
Sorry, the comment form is closed at this time.