Emergency Surcharges As Carriers Reroute Amid Red Sea Safety Concerns

Ocean carriers are imposing emergency peak season surcharges (PSSs) as global supply chains face weeks of disruption with ships being re-routed via Southern Africa instead of using the much shorter transit via the Suez Canal, reports The Loadstar.

Peak season surcharges

Japanese carrier ONE said today that from 1 January it would introduce an emergency PSS of $500 per teu on the Asia-Europe westbound trade, “given continuous strong demand … to maintain space provision, equipment supply and product service levels”.

The PSS will be a major blow to Asia-North Europe shippers already having to come to terms with new FAK (freight of all kinds) rates on the route of $3,000 per 40ft on 1 January.

And despite the establishment yesterday of a US-led multinational ‘Operation Prosperity Guardian’ naval task force security initiative in the Red Sea, carriers say they will avoid the Suez Canal until further notice.

Hapag-Lloyd’s 14,993 teu, 2016-built Al Jasrah was attacked by a drone missile while southbound in the Red Sea on Friday, causing a fire onboard. Fortunately, none of the crew was injured and the vessel was able to proceed on its return voyage to Asia.

However, the carrier said it regarded the situation in the region as “unsafe, and the risks for our crews onboard unacceptable”.

It added: “This is why we have had to decide to avoid the Suez Canal and the Red Sea with immediate effect, and instead route our ships around the Cape of Good Hope.”

The Alliance partner ONE said it had also decided to immediately re-route its ships around the Cape, “or have the vessels wait in a safe location”.

Indeed, several vessels that have transited the Suez Canal southbound have been instructed to pause and are, effectively, stranded pending a decision on whether they continue their voyages through the dangerous narrow Bab al-Mandeb Strait, off Yemen, or return to the Mediterranean via the Suez Canal, incurring a further circa-$500,000 toll.

And, in another potentially worrying development for shippers, French carrier CMA CGM said that, due to the situation in the Red Sea, it was invoking a force majeure clause in its bill of lading, relieving it of the liability of non-performance.

In practice, this may be a technicality, but it enables the carrier to discharge or ‘overland’ cargo at a port not specified in the bill of lading without being responsible for the on-carriage or relay of containers.

Meanwhile, in its latest Insights publication, supply chain platform Project44 concludes that commodities, including oil, will be the first to be impacted by the Suez Canal diversions, but thereafter retailers will have difficulty replenishing out-of-stock items after the holiday season.

“The world is dependent on trade with Asia for anything from electronics, clothes and manufacturing materials, and this could have major implications for retailers in Europe and the US,” said Project44.

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Source: The Loadstar

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