Industry News

The Red Sea is blocked! The industry has launched a war to grab cantiners


Another attack by Houthi armed forces on merchant ships in the Red Sea has triggered widespread concern in the industry. The ship "MAERSK HANGZHOU" was attacked twice in just 24 hours and was almost boarded. This incident caused Maersk, which had originally intended to resume the Red Sea route, to postpone its plan again. It may take longer for major shipping companies around the world to resume routes through the Red Sea-Suez Canal.

At the beginning of the new year in 2024, many customers are worried that freight prices will soar, and they are urgently negotiating with people in the logistics industry about placing orders and booking space, which may trigger a war over goods.

Since the Red Sea route cannot be restored for the time being, shipping companies have begun to require cargo originally planned to be shipped to the Red Sea to be rerouted. This means that the original freight consignment needs to be adjusted and the transportation time needs to be extended through the Cape of Good Hope. If the customer does not agree to the diversion, they will be asked to empty the cargo and return the container. If the container remains occupied, additional charges for extended use must be paid. It is understood that an additional US$1,700 will be charged for every 20-foot container, and an additional US$2,600 will be charged for every 40-foot container.

Logistics industry insiders pointed out that shipping companies still face threats from Houthi armed groups when sailing in the Red Sea. According to foreign reports, Maersk has agreed to double the salary of crew members as hazard pay for sailing in the Red Sea. Analysts believe that this shows that even if shipping companies resume Red Sea routes, the costs required will not be reduced and will ultimately still have to be borne by customers.

Under the pressure of wars and attacks, for customers, if there is no price advantage, even if the goods arrive relatively early, going through the Red Sea has lost its appeal. Customers prefer to ship goods as early as possible, and it is more important to choose to go around the Cape of Good Hope to safely deliver the goods to their destination.

Since the Red Sea crisis is a temporary event, some goods that have been contracted to go through the Suez Canal still choose to wait for the opening of the Red Sea. However, in view of the uncertainty of resumption of sailings, the shipping company has issued a notice asking customers to make a choice, either to return the container or agree to change the route. If the container is not returned, additional container usage fees must be paid.

Analysts in the shipping industry pointed out that the shipping market has been in a downturn for nearly a year, with slow container dispatch and low inventory due to the previous recession. Now that we have encountered such an emergency again, not only the container shipping industry must respond comprehensively, but all exporters are also on high alert. The entire industry was caught off guard. The latest SCFI freight index also indirectly confirms that the soaring freight rates have become a fact.

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