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January 4, 2024

Advisory: Red Sea Disruptions Continue to Impact Global Supply Chains  

Map highlighting Red Sea region with icons representing disrupted shipping routes and logistical challenges.

The Red Sea disruptions are still affecting global supply chains. Many shipping companies are changing how they operate, including stopping or reducing services, because of more frequent attacks on their vessels in this area.  

After an attack on its vessel ‘Maersk Hangzhou’, Maersk has decided to stop all shipping through these waters for an indefinite period. 

Key Points:

  • Maersk’s Decision: All transits through the Red Sea / Gulf of Aden are halted until further notice. Maersk remains in a holding pattern, with vessels like “Mathilde Maersk” redirecting westwards towards Gibraltar.  
  • Hapag-Lloyd Extends Routing: Hapag-Lloyd has extended its rerouting around Africa for another week before reassessing the Red Sea security situation.  
  • Increased Air Cargo Demand: The conflict is leading to a sharp increase in air cargo demand. The rising shipping rates, longer transit times, and supply chain delays are pressuring airfreight capacity. The situation is creating opportunities in air cargo charter services as shippers seek alternative routes for urgent shipments. Analysts expect air freight rates to rise. 
  • Red Sea Attacks and Shipping Costs: The Red Sea issues have impacted freight rates. Freight rates have jumped by 80% towards the end of December 2023. SCFI climbed to $2,694 per container from $1,497 on December 22. This was the highest it’s been in 15 months, since September 30, 2022. 


Red Sea Route

Carrier Responses:

  • CMA CGM has announced rate increases from Asia to North Europe, escalating from $2000/FFE to $6000/FFE by mid-January.
  • The Federal Maritime Commission in the US is allowing carriers to publish new tariffs with shorter notice due to these disruptions. 

Route Changes:

  • THE Alliance is redirecting Asia to US East Coast services via Panama instead of Africa. However, issues with the Panama Canal persist and normality is not expected until mid-2024. 

Differing Approaches:

  • MSC continues to reroute via the Cape of Good Hope due to the Red Sea crisis. 
  • CMA CGM expressed deep concern on the Red Sea attacks and emphasised their commitment to crew and vessel safety. CMA CGM is carefully assessing security to transit some vessels through the Red Sea and plans to incrementally increase Suez Canal transits. Shipping delays due to the Red Sea attacks are set to add significant cost to global shipping. 


Recent Developments:

  • In the last week of December, major carriers have been turning off AIS transponders for several vessels in transit.


Surcharges Effective from January

The prevailing circumstances in the Red Sea and Suez Canal have led container liners to apply emergency peak season surcharges, in addition to the already implemented General Rate Increases (GRIs). Most of these surcharges and GRI adjustments are set to come into effect starting January 1st, and certain carriers anticipate further increases as the market experiences heightened activity ahead of the Chinese Lunar New Year.  

The overall effect of these additional charges is that there is increase in the SCFI spot rate from Shanghai to North Europe over the past 2 weeks. Rates for routes such as North China to North Europe and Mediterranean are currently in the range of US$ 4000-4500 per FEU and US$ 5500-6000 FEW, inclusive of GRI, Bunker, and Peak Season Surcharges.


Secure Bookings in Advance

WeFreight is closely monitoring the delays and adjustments in rates. We strongly encourage suppliers to secure bookings well in advance. To effectively navigate these challenges, it’s strongly recommended that suppliers secure their bookings 3-4 weeks before the vessel’s departure. This proactive approach is crucial in managing potential issues that may arise.

WeFreight will continue to provide updates as necessary. We understand the importance of these developments on your business and are committed to offering support and solutions during this time.  

For the latest information and specific guidance for your shipping, we recommend reaching out to your nearest WeFreight office. For further assistance, please contact us here.

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