Spiralling ocean freight shipping rates become a reality

Date Added: 29 December 2023

Spiralling ocean freight shipping rates become a reality

Davies Turner's ocean freight department is seeing the predicted increases in container shipping costs stemming from the crisis in the Red Sea region become real as shipping lines are desperately trying to recoup the cost of sending vessels from the Far East to the Mediterranean, North Europe and US East Coast via the Cape of Good Hope rather than heading through the Suez Canal.

As we saw during the Covid years when there were huge disruptions in supply chains, if there is still an urgent need to get shipments moving, then businesses will have to pay an awful lot more to do so.

Data on the Xeneta platform indicates rates per feu stood at USD1,875 between the Far East and Mediterranean on 14 December – already an increase of 25% on the previous week. However, it has been reported that shippers are being quoted upwards of USD6,500 for high priority shipments on MSC's Diamond Tier service, and Xenata has said that whilst this price is not the market average yet, it is what businesses will have to pay for urgent shipments. In the next 10 days or so, it may well become the market average.

The Suez Canal is a critical artery for global trade so disruption caused by the missile attacks will not be solved quickly or easily. We expect ocean freight shipping rates will continue to rise, and shipping lines have already announced all kinds of ‘recovery cost surcharges’ even for trades which are only indirectly impacted by the problems in the Red Sea.

With Chinese Lunar New Year also on the way and the traditional increases in demand that brings, the cost of ocean freight shipping could grow even more dramatically.

Davies Turner is committed to helping clients manage this difficult situation and mitigate where possible additional costs incurred. Our oceanfreight team will endeavour to keep in close contact with all clients to provide up-dates on specific movements.

For more information about Davies Turner’s ocean freight forwarding and logistics services, please contact ocean@daviesturner.co.uk or visit the relevant pages of this website.

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