Ocean cargo rates climb after new Red Sea ship attacks (updated)

Freightos

03/01/2024 23:24

(Adds comment on higher rates in paragraphs 8 and 9, graphic of
Shanghai Containerized Freight Index)
    By Lisa Baertlein
       LOS ANGELES, Jan 3 (Reuters) - Ocean freight rates are
surging after a missile attack and attempted hijacking of a
Maersk ship this weekend prompted carriers to suspend plans to
restart transits through the Red Sea, a key artery to the vital
Suez Canal trade route. 
    Yemen-based Houthi militants have been attacking high-value
cargo vessels in the Red Sea since November in a show of support
for Palestinian Islamist group Hamas fighting Israel in Gaza. It
has forced ships to reroute around the southern tip of Africa,
driving up the cost for vessels for the longer voyage, though
rates are still far below pandemic levels reached in 2021. 
    
    Egypt's Suez Canal connects the Red Sea to the Mediterranean
Sea and is the fastest way to ship fuel, food and consumer goods
from Asia and the Middle East to Europe. Shippers use the route
to ferry as much as one-third of all global container cargo,
including toys, tennis shoes, furniture and frozen food.
    The attacks are already delaying delivery of products
destined for numerous companies, as the Suez route is used by
the likes of IKEA, Walmart  WMT.N  and Amazon  AMZN.O . 
    Asia-to-North Europe rates more than doubled to above $4,000
per 40-foot container this week, with Asia-to-Mediterranean
prices climbing to $5,175, according to Freightos  CRGO.O , a
booking and payments platform for international freight.
    Some carriers have announced rates above $6,000 per 40-foot
container for Mediterranean shipments starting mid-month, and
surcharges of $500 to as much as $2,700 per container could make
all-in prices even higher, Judah Levine, Freightos' head of
research, said in an email.
        As of Wednesday, hundreds of container ships and other
vessels have been rerouted around Africa's southern Cape of Good
Hope to avoid the attacks - adding anywhere from 7 to 20 days to
their voyages.   
    Those so-called, one-time "spot" rates are roughly double
the rates for freight that moves on the contract market,
logistics executives said. 
        "People desperate to get space (on ships), are going to
pay," said Christian Sur, executive vice president for ocean
freight at Unique Logistics.     
  
    Rates to less-affected North American ports also are moving
higher. 
    Up to 30% of cargo that arrives at the U.S. East Coast
travels through the Suez Canal. Logistics executives expect some
of those imports to be diverted to the U.S. West Coast - which
is a straight shot across the Pacific Ocean from China and other
Asian exporters. 
    Rates for shipments from Asia to North America's East Coast
climbed 55% to $3,900 per 40-foot container. West Coast prices
jumped 63% to more than $2,700 ahead of expected cargo
diversions to avoid Red Sea-related issues, Levine said.
    While rates have spiked, they remain far below 2021's
pandemic-fueled record highs of $14,000 per 40-foot container
for Asia to North Europe and the Mediterranean and $22,000 for 
Asia to North America's East Coast.

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 (Reporting by Lisa Baertlein in Los Angeles and Noel Randewich
in San Francisco; Editing by Nick Zieminski and David Gregorio)
 ((lisa.baertlein@thomsonreuters.com; +1 310-491-7241; Reuters
Messaging: lisa.baertlein.thomsonreuters.com@reuters.net))