Shipping stocks jump as freight costs soar amid Red Sea tensions
MEKSEA.COM – The tension in the Red Sea has led to several shipping companies announcing an increase in freight rates starting from January 2024. Due to the impact on safety and transportation routes, major shipping lines such as Yang Ming Line, One, Evergreen Line, HMM, Maersk, and others have notified additional fees for route changes in the Asia-Europe trade, avoiding the Suez Canal and the Red Sea area.
Beginning January 2024, freight rates to the US/Canada and the EU have significantly increased compared to December 2023. Specifically, prices on the West Coast (LA) have risen by $800-$1,250 depending on the route. For example, rates that were $1,850 in December 2023 have increased to $2,873-$2,950 in January 2024. On the East Coast (NY), the increase ranges from $1,400 to $1,750, with rates going from $2,600 in December 2023 to $4,100-$4,500 in January 2024.
Shipping to the EU has seen a substantial increase as well. For instance, the rate to Hamburg, which was $1,200-$1,300 in December, has surged to $4,350-$4,450 in January 2024, more than doubling. The main reason for this is attributed to the fact that 80% of goods heading to the East Coast of the US/Canada and the EU pass through the Suez Canal. Ongoing tensions involving Israel/Hamas and attacks by Houthi rebels (Yemen) on ships entering the Red Sea have forced shipping lines to detour around the Cape of Good Hope (South Africa), adding 7-10 days to the journey.
This prolonged route has led to increased transportation costs and a longer turnaround time for ships, with each voyage taking approximately two weeks longer. Some shipping routes have had to cut many weekly shipments, resulting in a shortage of space or the addition of extra ships, further increasing costs.
This situation poses a potential challenge for the seafood industry in 2024. If tensions in the Red Sea persist or escalate, it could lead to higher transportation costs, increasing input costs for aquaculture and seafood processing, impacting competitiveness, and affecting the profitability of seafood businesses.
In response to these challenges, on December 28, 2023, the Import-Export Department of the Ministry of Industry and Trade issued document number 1116/XK-TLH, aiming to mitigate the impact of developments in the Red Sea region.
The Import-Export Department (Ministry of Industry and Trade) recommends that industry and logistics associations closely monitor and regularly update businesses on the situation. This information will help companies proactively plan their production and import-export activities, avoiding congestion and other adverse effects.
The Import-Export Department suggests that import-export businesses closely monitor the situation, devise appropriate plans, and communicate with partners. They should be prepared to extend loading and unloading times in necessary cases.
Businesses are encouraged to explore and diversify their supply sources to minimize the impact on the supply chain. Understanding rail transportation methods can provide alternative delivery options.
When negotiating and signing trade and transportation contracts, businesses should include clauses on compensation and liability waivers in emergencies. It is advisable to purchase comprehensive insurance coverage to prevent risks and losses in case of extended transportation times or incidents on this route.
|What Meksea can provide for this tough situation?
|For the high cost: Combining container services can help businesses save much cost for ocean freight. Meksea can help to stuff many different seafood items into 1 container, you can purchase a diversity of goods with high quality and saving cost.
For the booking: We’ll follow the shipping schedule strictly, update you with the clear time, and push for your booking in priority as our agent’s best solution.
So what is your next purchase plan? Meksea is eager to hear from you and let us bring you our best value from Vietnam.
By Hayati (Meksea Team)
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