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Ocean Freight Rates continue to react to Red Sea Disruptions

29th May 2024

Disruptions to freight routes in the Red Sea are continuing to cause issues worldwide including increasing freight rates. This issue has been evolving since January 2024 and is predicted to continue to impact global shipping networks for some time still.

With 30% of global container trade transiting through the Suez Canal, the Red Sea shipping crisis is upending supply chains. This is compounded by the ongoing shipping disruptions caused by blockages in the Panama Canal, which is experiencing one of the region’s worst droughts since the 1950s.

Due to the Red Sea issues, vessels are rerouting via the Cape of Good Hope, significantly impacting on-time performance and schedule reliability. The delays caused by this rerouting are exacerbating the already strained supply chains, leading to extended transit times and further complicating logistics planning for shippers.

“The longer the duration of these disruptions, the more likely shipping rates will stay elevated — if not increase further.” stated Nora Szentivanyi, Senior Economist, J.P. Morgan, in February 2024.

The current state of the Far East Westbound Ocean routes are key factors driving the persistently high rates in sea shipping. JJ Lawson are committed to staying abreast of international shipping concerns to ensure best alternatives and options are accessed for our clients.