The Food Shippers of America Blog

Middle East Conflicts Cause Rise in Freight Rates

by Staff, on Jan 8, 2024 12:28:29 PM


Houthi rebel attacks on commercial vessels in the Red Sea persist - leading to the rerouting of ocean container traffic away from the Suez Canal. Despite the presence of the international naval task force patrolling the area (Operational Prosperity Guardian) 23 commercial vessels have been targeted since mid-November. The recent assault on a Maersk container vessel has further heightened tensions, resulting in an upsurge in ocean freight rates. This is of particular concern to food shippers sourcing ingredients and packaging, or serving markets in the area.

To avoid the Red Sea, most container carriers are adjusting their routes, causing longer voyages and extended lead times for importers. These prolonged return trips may contribute to container shortages at Asian origin ports. While carriers are working to manage diversions, potential congestion and equipment shortages loom. The disruption coincides with preparations for China's Lunar New Year holiday, posing a risk of increased demand and congestion.

Shipp Routes China to US

Freight rates have seen a significant spike, with Asia-Europe rates surging 173%, exceeding $4,000/FEU compared to pre-diversion levels. Asia-Mediterranean prices have doubled, exceeding $5,000/FEU. Carriers have introduced surcharges ranging from $500 to $2,700 per container, further driving prices higher. Rates to North America's East Coast have risen by 52% to $3,900/FEU, and prices to the West Coast have also experienced sharp increases. Despite the elevated rates and surcharges, carriers report available capacity to accommodate diversions, and demand remains consistent with pre-pandemic levels.

In the air cargo sector, there have been no significant disruptions reported. While some analysts anticipate a potential shift of urgent volumes to sea-air services or alternative air cargo options due to ocean freight delays, such a trend has not materialized thus far.

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