News

In recent weeks, a severe ocean freight capacity crunch across most major trades has sent freight rates on a skyrocketing trajectory. This rather sudden change in supply and demand has been fueled by high demand and network bottlenecks in part due to the Red Sea situation.

Starting with the conclusion, ocean freight levels are surging in a period that is usually considered a slack season, especially on the Far East Westbound trade from Asia to Europe, which is widely considered the global blockbuster trade.

With the crisis in the Red Sea having turned into a prolonged new normal, yet another stark reminder was provided on 13 April that ever-present geopolitical turmoil has a profound impact on global supply chains.

As we enter the third month of attacks on commercial vessels in the Red Sea by Houthi rebels, the outlook for a resolution to the ensuing conflict looks further away than ever

It would be a fair statement that the start of 2024 has been anything but quiet, and our stability temperature monitor is edging ever closer to code red.

At the inception of this advisory, the headline read “Red Sea crisis enters hibernation mode”; however, this headline is clearly no longer reflecting the latest development.

As we enter day 24 of the Red Sea crisis, the situation is as such unchanged, with the industry having grown accustomed to utilising routing via the Cape of Good Hope in the wake of Houthi attacks on commercial vessels in the Red Sea.

Although three major ocean freight alliances are in place for sharing vessel capacity, recent events have made it painfully apparent that this does not translate into consistency in risk assessments, routing decisions, and schedule reliability. Most apparent has been the limbo dance performed by Maersk, which, in recent days, has completed a U-turn on the decision to once again transit through the Red Sea and Suez Canal. 

Following the Christmas holidays, the situation in the Red Sea remains fluid and uncertain. It is also clear that carriers are currently divided in their risk assessment, providing an overall blurry picture of the situation.