As a result of the continued threat posed by the Houthis to navigation in the Red Sea, as of the 27th, nearly 20% of the global container fleet, equivalent to 364 mega-container ships with a total capacity of more than 2.5 million TEUs, have been forced to change their routes and sail around the Cape of Good Hope. Experts point out that freight rates will remain at a high level in the short term because global shipping scheduling is not like a light switch that can be switched quickly. The biggest impact of this situation is expected to be seen gradually in the next six weeks.
The Asia to Europe shipping market continues to be in turmoil, with toys such as Tonka toy trucks with rainbow bears produced by US toymaker Basic Fun, originally planned to be shipped through the Suez Canal to retailers such as Walmart, but now being accelerated to be shipped around the Cape of Good Hope in order to avoid the Suez Canal route. This comes after major global retailers such as Ikea and Amazon have taken the same response.
Basic Fun's chief executive, Mr. Furman, said the company's toys, which are manufactured in mainland China and sold to Europe, used to be shipped through the Suez Canal, but now it has to choose to bypass the Cape of Good Hope because "it takes too long and is too expensive". Since the Israeli-Palestinian conflict in October, Basic Fun has doubled the cost of shipping from mainland China to the UK to about $4,400.
With the changing situation in the Suez Canal, Maersk and Duffy ships are ready to resume Red Sea sailings under military escort. According to Maersk's schedule estimates, almost all of the carrier's container ships from Asia to Europe have resumed routes through the Suez Canal, with only a few opting to detour around the Cape of Good Hope.
However, Yardwell, executive vice president of ocean freight logistics at forwarding giant Kuehne+Nagel, said the biggest impact could be felt in the next six weeks. As global shipping scheduling can not be quickly switched, global shipping routes will need to be readjusted. He predicted that the detour navigation may lead to a lack of container ship space, empty container scheduling difficulties, and trigger a short-term shipping price surge.
As of the 27th, nearly 20% of the global container fleet, about 364 capacity of more than 2.5 million TEUs of ultra-large container ships, have been forced to change the route around the Cape of Good Hope.
The head of Flexport's ocean freight business said that shipowners have begun to implement slot rationing for contract customers. For example, despite the contractual commitment to provide customers with ten slots per month at a lower contract price, only five slots can now be carried out at the contract price, with the remaining containers required to be settled at a higher spot rate.
Due to the shortage of slots, exporters are scrambling to book slots from China to Europe before the Chinese New Year. Industry insiders say shippers must reconfirm each slot because shipping schedules and routes are subject to change. To secure space, shippers must take such measures. Smaller exporters in particular may be at risk of having their slots canceled by shipping lines.
