Freight warning! Red Sea routes suspended for at least 90 days?

According to tracking statistics from a shipping big data platform in the industry, as of the 19th, the number of container ships passing through the Bab el-Mandeb Strait (the gate to the Suez Canal, one of the most important waterways in the world) located at the junction of the Red Sea and the Gulf of Aden has dropped to zero, which shows that Key access to the Suez Canal has been paralyzed.

According to data provided by logistics company Kuehne + Nagel, 121 container ships have given up entering the Red Sea and Suez Canal and have chosen to go around the Cape of Good Hope in Africa, resulting in an increase in voyage distance of about 6,000 nautical miles and a possible extension of sailing time by 1 to 2 weeks. The company expects more ships to join the detour in the future. According to the latest report from the US Consumer News and Business Channel, the total value of the cargo carried by these ships diverted from the Red Sea route exceeds 80 billion US dollars.

In addition, according to multiple foreign media reports, for ships that still choose to sail in the Red Sea, the cost of insurance jumped this week from about 0.1% to 0.2% of the hull value to 0.5%, which is the cost of each voyage of a ship worth $100 million. The cost of insurance reaches $500,000. Changing the route means higher fuel costs and delayed cargo arrival at the port, while continuing to pass through the Red Sea will bear greater safety risks and insurance costs. Shipping and logistics companies will face a dilemma.

United Nations officials say that if the crisis in the Red Sea shipping lanes persists, it could lead to higher commodity prices, with consumers footing the bill.

Global home furnishing giant warns: Some products may experience delivery delays

As the situation in the Red Sea escalates, some companies have begun to use a combination of air and sea transportation to ensure that goods are delivered safely and on schedule. The chief operating officer of a German logistics company in charge of air freight business said that some companies choose to transport goods by sea to Dubai, United Arab Emirates, and then airlift the goods to the destination from there. More customers have entrusted the company with mixed air and sea transportation. Clothing, electronic products and other goods.

Global home furnishing giant IKEA recently warned that some of its products may experience delivery delays due to attacks by Houthi armed forces on ships heading to the Suez Canal. An IKEA spokesman said the situation in the Suez Canal would cause delays and could lead to supply constraints for some IKEA products. In response to this situation, IKEA is in dialogue with transportation providers to ensure that goods can be transported safely.

At the same time, IKEA is also evaluating other supply route options to ensure that its products can be delivered to customers. Many of the company's products typically travel through the Red Sea and Suez Canal from factories in Asia to Europe and other markets.

Project 44, a global supply chain information visualization platform service provider, pointed out that avoiding the Suez Canal will extend shipping time by 7-10 days, which may lead to inventory shortages in stores in February.

In addition to product delays, longer voyages will increase shipping costs, which may have an impact on prices. Shipping analytics firm Xeneta estimates that each voyage between Asia and Northern Europe could cost an additional $1 million after changing routes, a cost that will ultimately be passed on to consumers purchasing goods.

Some other brands are also paying close attention to the impact the Red Sea situation may have on their supply chains. Swedish appliance maker Electrolux has set up a task force with its carriers to study a range of measures, including finding alternative routes or prioritizing deliveries. However, the company expects the impact on deliveries to be limited.

Since November 19, Yemen’s Houthi armed forces have launched continuous attacks on Israeli ships transiting the Red Sea region, seriously disrupting the normal operation of global shipping and causing the global freight supply chain to fall into chaos. Exporters are rushing to find alternative air transport, Land and sea shipping routes to ensure timely delivery of all types of merchandise to retailers. To cope with the challenges caused by the disruption of Red Sea routes and ensure the stability of the supply chain.

The disruption to the route affects the Suez Canal, a major trade route connecting Europe and North America with Asia, and the Panama Canal, another major waterway that has seen long queues due to drought, has sent container shipping costs soaring on ocean routes. In some cases it has more than tripled.

S&P Global warned in a report that the consumer goods industry, which supplies the world's top retailers such as Walmart and Ikea, will face the greatest impact if supply disruptions are prolonged.

Alan Baer, CEO of American logistics company OL USA, suggested that shipping and logistics customers need to prepare for at least 90 days of disruption to Red Sea transportation, pointing out that it is the Christmas holiday and everything will be calm until January 2, but Then comes the madness.

However, Jan Kleine-Lasthues, CEO of air freight at Hermann Logistics, a world-renowned freight forwarder, said that some fast-moving companies are already trying to switch to intermodal transport. The company has seen interest from some apparel, electronics and technology industries in an intermodal model of air and sea freight, with one option being to first transport goods by sea to a port in Dubai, where they are then transshipped by plane to the destination.

However, Paul Brashier, vice president of short haul and intermodal transport at supply chain group ITS Logistics, pointed out that cost is the main constraint on this alternative. Companies transporting urgent or critical items may choose air freight, but it cannot be a comprehensive solution.

Brian Bourke, global chief commercial officer of SEKO Logistics, said that the cost of air freight is about 5-15 times higher than that of sea freight. But if the time it takes for goods to be on shelves doubles, more shippers will have no choice but to turn to air freight, especially for high-value items such as designer clothing and high-end electronics. He said he has received some inquiries from customers.

Corey Ranslem, CEO of Dryad Global, a British maritime risk consulting and security company, said that about 35,000 ships cross the Red Sea every year, transporting goods between Europe, the Middle East and Asia, accounting for about 10% of global GDP. U.S. retailers such as Walmart, Target, Macy's and Nike all rely on the route to transport goods. It added that under the threat of a prolonged shutdown, the price of fuel and cargo entering Europe will rise significantly, and in addition to the increased cost of detouring around Africa, transit time may increase by approximately 30 days depending on the port of arrival.

At the same time, the shipping industry does not have 100 percent confidence in the U.S. Prosperity Champions program. One source noted that it was unclear whether U.S.-led maritime forces could prevent more attacks and secure shipping lanes.