‍Red Sea Updates

Two Maersk box ships come under fire in latest Houthi missile attack

Two Maersk vessels, Maersk Detroit and Maersk Chesapeake, were forced to abandon their naval convoy and leave the Red Sea due to another missile attack on 24th January 2024. The vessels, carrying military supplies and escorted by the US naval vessel USS Gravely, experienced an attack by Houthi militants. This news comes a week after President Joe Biden acknowledged that airstrikes were ineffective in preventing Houthi attacks on shipping.

Both Maersk ships reported witnessing nearby explosions, and the US Navy intercepted multiple projectiles. Maersk has suspended Red Sea transits by its US subsidiary until further notice. Despite ongoing operations, including airstrikes by the US and UK on Houthi targets, the rebels show little sign of being deterred.

Ongoing decline in vessel traffic in Suez Canal  

The Suez Canal Authority (SCA) reported a 30% decline in vessel traffic and a 40% drop in revenue from January 1 to January 11, according to Alphaliner data. SCA Chairman and MD Ossama Rabiee ruled out discounting canal fees, deeming it insufficient to attract more customers given the current scenario.

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Ocean Import Updates

Cargo patterns shift causing emissions to soar

As many carriers divert their cargo around the Cape of Good Hope, the added distance and extended voyage duration have led to increased ship emissions.  

This shift has prompted some shippers to explore air cargo options, causing a substantial secondary increase in CO2 emissions, surpassing those associated with the extended shipping route.

SeaRoutes data suggests that emissions from vessels circumventing the Cape could be approximately 27% higher per twenty-foot equivalent unit (TEU) compared to the Suez Canal route. However, this estimate may be a considerable underestimate, assuming the vessel remains unchanged before and after rerouting.  

Yet, the emissions implications of the current strategy—shifting cargo from sea to air—are even more significant. According to calculations by the International Civil Aviation Organization (ICAO), transporting the same cargo amount via a realistic sea-air route, involving loading in Shanghai, transferring in Dubai, and then transporting by air to Schiphol, could result in 36.2 tonnes of CO2 emissions per TEU. This represents a staggering 4,872.6% increase over a conventional Suez Canal Sea transit.  

Through our advanced supply chain visibility tools, we empower businesses to quantify and monitor their carbon footprint in real-time, providing crucial insights into the environmental impact of their shipping choices.

Leveraging scenario analyses and optimisation opportunities, we assist businesses in making informed decisions that align with their sustainability goals while optimising supply chain efficiency. Get in touch to find out more about Pathway and book a demo.

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Furniture supply chains struggling with Red Sea challenges

Importers in Europe are experiencing delays of up to a month in receiving products from Asia, and freight costs have tripled. However, there is some relief as freight rates are starting to decrease.  

Furniture supply chains across Europe and the US are a major industry to be affected with about 63% of all European furniture imports coming from Asia. The furniture sector may face additional challenges due to a shortage of wood exports from Europe to China. Backhaul vessels are delayed, and loading ports in North Europe are being skipped.

Major companies like IKEA and BDI Furniture have warned of delivery delays and reduced inventories, impacting both large and small players in the industry.  

Despite these challenges, freight rates are starting to decrease. The Ningbo Containerized Freight Index (NCFI) reported a rate decrease in 18 of its 21 export routes from China in the past week.

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Asia-Europe spot rates begin to stabilise

Container spot rates from Asia to Europe have seemingly peaked ahead of Lunar New Year, showing a modest 1% increase this week for an average of $4,984 per 40ft on the Asia-North Europe component. Similarly, Asia-Mediterranean rates rose by 1% to reach $6,365 per 40ft.  

Despite the marginal weekly changes, both trade lanes have seen significant year-on-year increases of 186% and 129%, respectively, largely influenced by the recent substantial rate hikes due to the Red Sea crisis.  

Recent reports indicate that shipping companies might be becoming more flexible regarding their approach to contract allocation coverage and releasing equipment. However, challenges remain, with anecdotal evidence pointing to problems like a shortage of haulage services in Dalian, China, which is impacting the collection of empty containers.

Some cargo owners are postponing shipments until after the Lunar New Year holiday.

Lunar New Year, beginning 10th February, is expected to bring weaker demand, particularly for North Europe. Analysts are questioning the strength of demand post-Lunar New Year and whether carriers can maintain the high-rate hikes implemented due to the Red Sea crisis.

While container spot rates from Asia to Europe have shown a modest increase, our expertise allows us to provide tailored solutions that address the complexities of the market. As shipping companies show signs of flexibility in contract allocation coverage and equipment release, our team can navigate these changes effectively, ensuring smooth operations for our clients. Our strategic approach includes offering guidance on potential delays due to the Lunar New Year, allowing businesses to plan and adjust their logistics strategies accordingly.

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Air Freight Updates

Clothing shippers switch to air as Red Sea disruption continues

There has been a surge in air cargo demand as forwarders respond to disruptions in the Red Sea, with garment manufacturers taking the lead. According to Xeneta, shippers in the retail and apparel sector are transitioning to airfreight, evident in a 62% increase in volumes from Vietnam to Europe. This surge surpasses the October peak by 6% and is 16% higher than the same period last year.

Niall van de Wouw, Xeneta's Chief Airfreight Officer, noted, "This is the first signal in Xeneta data that the Red Sea crisis is impacting air freight." Given that this is typically a quieter time for air freight, the substantial increases in volume, exceeding any point in 2023, are significant.  

The routes from Vietnam to Europe, crucial for the apparel sector, are experiencing a notable uptick in volumes, potentially due to the industry shifting more goods from ocean to air amidst the Red Sea crisis.

Despite the growth in demand, airfreight rates have not yet experienced significant increases yet. However, with Lunar New Year fast approaching, we recommended booking air shipments around five days beforehand (10th February) to mitigate potential cancellations. The impact on airfreight is becoming increasingly evident as disruptions in the Red Sea continue to unfold.  

As garment manufacturers lead the transition to airfreight, our team is equipped to provide tailored solutions for the evolving needs of the retail and apparel sector. We are adept at adapting to market dynamics, recommending proactive measures that minimise the risk of cancellations and help keep your goods on the move.

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