Recent Houthi attacks in the Red Sea are an important reminder of the geopolitical risks that continue to impact global trade, said John Donigian, senior director of supply chain strategy at Moody's Analytics. While the main attacks are currently on the transportation of oil and agricultural products, the trade route is used for a wide range of products and industries that rely on timely and cost-effective containerized shipping. If Red Sea attacks become more frequent, they could have far-reaching implications for global trade and supply chains.
Red Sea attacks have also reversed persistently low containerized shipping rates, especially on routes through the Red Sea. According to Platts, services on routes from Asia to the U.S. West Coast have not been directly affected, but there has been a knock-on effect.
Freight rates from Southeast Asia to the U.S. East Coast are at $4,100 per TEU, up 86 per cent since early December 2023, while freight rates from Southeast Asia to the U.S. West Coast are at $2,900 per TEU, up 81 per cent, according to Platts, an international market intelligence and analysis firm. Freight rates from North Asia to the U.S. East Coast were assessed by Platts at $3,800 per TEU, up 65 per cent from early December, while rates from North Asia to the U.S. West Coast were $2,800 per TEU, up 78 per cent.
Xeneta data, which tracks short-term (immediate) and long-term (contracted) ocean freight rates, showed that as of Jan. 2, the short-term average freight rate on the Far East to Mediterranean route had soared to $3,589 per TEU, a 48 per cent jump in a matter of days. The average long-term freight rate signed on the route over the past three months was $1,504 per TEU, with the short-term average now reaching more than double the long-term rate.
Alternative routes to the Red Sea are increasing the cost and time of ocean freight in world freight logistics. As the Red Sea and Panama Canal disruptions continue, global ocean freight rates may again see a period of high rates.
Weakness in airfreight demand in 2023 due to continued high inventory levels, further capacity additions, and modal shifts due to air-sea freight pricing does not bode well for the outlook for 2024.
Capacity growth continues to outpace demand, with international freighter capacity approaching 2019 levels. Market rates continued to decline, but the downward trend slowed from May and remained flat and above pre-outbreak levels for most of the period.
WalLTech will continue to pay attention to and update relevant knowledge about global freight logistics in the future. If you have any questions about logistics integration software, you can contact us! We will provide you with efficient and scientific world freight logistics software solutions.
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