Red Sea freight rates increase by nearly 250%

RED SEA FREIGHT RATES INCREASED NEARLY 250%:

  • According to an article in Tuoi Tre, the cost of transporting goods through the Red Sea has increased by nearly 250% compared to previous prices. Experts are concerned that global inflation could become more serious if the cost of transporting goods through the Red Sea continues to increase.
  • Freight rates have risen 140%, according to shipping consultancy Drewry. Experts say the cost of shipping goods through the Red Sea has risen sharply since Yemen’s Houthi forces began attacking commercial vessels in the waters in late November 2023. Prolonged disruptions to shipping through the Red Sea could push up inflation globally.

 

  • The world’s largest shipping lines have been forced to suspend Red Sea operations and reroute their vessels, including Europe-based MSC, Maersk, CMA CGM and Hapag-Lloyd; and Asia-based Cosco Shipping, HMM and Evergreen Line; as well as oil and gas tanker operators. The alternative route for the East-West trade route is around the Cape of Good Hope at the southern tip of Africa. However, this will increase travel times between Europe and Asia.
  • Experts say that freight rates for shipping goods through the Red Sea will continue to rise in the coming time. This will affect many industries and cause anxiety for manufacturers and consumers globally.
  • In short, freight rates through the Red Sea have increased by nearly 250% compared to previous prices. Experts fear that global inflation could worsen if the cost of shipping goods through the Red Sea continues to rise. The world’s largest shipping lines have been forced to suspend operations through the Red Sea and reroute their ships. The alternative route for this East-West trade route is around the Cape of Good Hope at the southern tip of Africa. However, this route will increase travel times between Europe and Asia.

AIR FREIGHT RATES SURGE:

  • While U.S. shippers have a wide choice of ocean routes, European shippers do not. Europe is heavily dependent on the Suez Canal. Rerouting cargo to Europe takes longer than to the U.S., so European shippers are turning to air freight to save the day.
  • While Freightos Air Index daily rates for shipments from China to Northern Europe have been falling since late November, this week’s surge in air freight has sent air freight rates soaring, said Judah Levine, head of research at Israel-based freight booking and payment platform Freightos.

  • “Air freight rates have increased 13% this week from $3.95/kg to $4.45/kg since the ocean carriers announced the rerouting, reflecting the increased demand for moving cargo from ocean to air,” said Levine.
     
  • The severity of the impact on global supply chains from the Red Sea will depend on how long the rerouting takes, according to Brian Bourke.
     
  • “Every day that this continues, from Europe and then the US East Coast, you will start to see more shifts from ocean to air,” said Bourke.
     
  • “It will start with higher value cargo like consumer electronics, high-value consumer goods and fashion apparel. This is because the transportation time is longer, increasing the cost of transporting inventory and working capital, so the cost will be higher if you want to transport goods faster,” said representatives of Logistics companies.