Red Sea Shipping Disruptions: Shippers Face Extended Waits and Added Fees
The Red Sea, a key waterway of the heavily trafficked Asian-European shipping lanes, has been plagued by disruptions since the middle of November 2023. Houthi rebels, launching from Yemen, have attempted to attack shipping and cargo vessels of various size, interrupting global trade.
To the north of the Red Sea is the Suez Canal, which provides passage to and from the Mediterranean Sea. About 40% of Asia-Europe trade passes through this crucial system.
Conflicts and Geopolitics at the Core of Shipping Disruptions
The Houthi-rebels claiming responsibility for these attacks site that their actions are driven due to the ongoing conflict between Gaza and Israel. Despite their claims to only target Israeli-linked vessels, ships under various flags have been subject to attacks from drones and missile fire.
Aside from escalating tensions on the political front, attacks on ships have driven many ocean carriers to alternate routes. This includes major lines such as MSC, Maersk, and Hapag-Lloyd.
A coalition of nations, made up of the United States, United Kingdom, Canada, France, Norway and others, have pushed forth a security initiative in an effort to protect all ships in the area. Referred to as Operation Prosperity Garden, the goal is to provide an umbrella of protection, especially for ships passing through the Bab al-Mandab Strait, through which the Red Sea is accessed via the Gulf of Aden.
How Altered Routes are Leading to Extended Transit Times and Price Increases
To bypass use of the Suez Canal, ships traveling along the Europe-Asia trade lanes are now routing around the Cape of Good Hope below Africa. That’s also the case for ships traveling to the U.S. East Coast from India and China. Depending on the departure and destination ports, this route adds 10 to 14 days to the standard travel time and hundreds, sometimes thousands, of nautical miles.
The added miles also mean an increase in fuel consumption. Because of this, shippers can expect higher fuel surcharges per delivery as carriers try to recoup the cost. Small to medium businesses risk getting pushed out due to higher prices and larger companies seeking greater space allotments for their freight.
At the moment, the average surcharge per standard TEU traveling from China to Northern Europe is between $700 to $900. The fees vary by carrier and which emergency contingencies are put in place.
Red Sea Shipping Alternatives
What can shippers do if they have cargo that typically moves through the Red Sea? The first option is to do nothing. Yes, some carriers are diverting ships. However, access to the Red Sea itself and the use of the Suez Canal remains ongoing. Roughly 50 to 60 ships are passing through the locks daily.
If your shipment is already in transit on a ship that is being re-routed, your options are also limited. However, should you wish to avoid the situation entirely, there are air freight options available for certain types of cargo.
Small to medium-sized businesses that are getting freight rolled over to make room for large companies may find the additional cost of shipping via air is preferable to waiting for weeks or months for available space.
R+L Global Logistics Is Working To Help You
If you’re looking for ways to avoid disrupting your supply chains, R+L Global Logistics is here to help. Our freight forwarding services can help you arrange alternative shipping routes through ocean or air shipping.
Get full-service options by working with our qualified customs brokers for import/export needs, and find options for domestic shipping and warehousing within the continental U.S. When you’re ready for a one-stop-shop strategic partner to cover all your logistics needs, reach out at (877) 510-9133.