Spot Container Rates Soar 173% On Red Sea Diversions

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  • Suez traffic is down 28% in past 10 days, IMF PortWatch says.
  • Risk of congestion rises heading into Chinese Lunar New Year.

Short term rates for container shipping between Asia, Europe and the US are climbing on reduced capacity caused by the ongoing threats to cargo vessels in the Red Sea, reports the Business Times.

The spot rate for shipping goods in a 40-foot container from Asia to Northern Europe now tops US$4,000, a 173 per cent jump from just before the diversions started in mid-December, Freightos.com, a cargo booking and payment platform, said on Jan 3.

Fallout from a slowdown in Suez Canal traffic

The cost for goods from Asia to the Mediterranean increased to US$5,175, Freightos said, adding that some carriers have announced prices above US$6,000 for this route starting in mid-January. Rates from Asia to North America’s East Coast have risen 55 per cent to US$3,900 for a 40-foot container.

Services from Asia to northern Europe and to the Mediterranean both cost more than twice their levels in January 2019, but are still well below their peaks during the pandemic, said Judah Levine, head of research at Freightos.

The rate spike is part of the fallout from a slowdown in Suez Canal traffic, which has slumped by more than a quarter in recent days, as vessels take longer routes to avoid missile strikes from Yemen’s Iran-backed Houthi militants. The Houthis said they were going after any vessels that have a connection with Israel, although those purported links have looked increasingly tenuous.

Shipping lines raise their prices when capacity is stretched, and add surcharges for the extra time it takes to deliver the goods and during busier-than-normal times of the year.

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Source: The Business Times

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