In a continuing saga, the Red Sea crisis enters its second month, causing ripples across the global supply chain and trade routes. Shipbroker Xclusiv reports a 14% decrease in Suez Canal transits since mid-December 2023, with around 50 daily transits—a 17% drop compared to last year.
Container giant Maersk announces a strategic shift, rerouting vessels away from the Red Sea, opting for the longer but safer route around Africa’s Cape of Good Hope. This move significantly increases tonne-miles, impacting vessel utilization and raising shipping costs.
The crisis contributes to a surge in container rates, with the FBX index reaching 2,606 points, a 105% increase since December 5, 2023. Short-term rates between Asia, Europe, and the US rise due to reduced capacity from Red Sea threats. Spot rates from Shanghai to Europe spiked by 237%, reaching USD 2,870/TEU, while rates to the Mediterranean and East Coast America experienced increases of 187% and 61%, respectively.
Notably, tanker rates on Red Sea routes follow an upward trend. The Suezmax TD23 route witnesses a nearly doubled payment at USD 30,958/day. LR2 TC15 and TC20 routes see substantial increases from USD 8,129/day and USD 20,988/day to USD 25,996/day and USD 57,422/day, respectively. The LR1 TC8 route jumps to USD 49,143/day from USD 21,055/day a month ago.
Xclusiv predicts that, alongside geopolitical risks, factors such as fuel costs, green transition, and supply chain disruptions will pressure shipping costs in 2024. Despite these challenges, industry optimism persists, driven by positive signs of increased demand for commodities and potential recovery in consumer spending. Effective cost management and adaptation to the evolving global economic environment will be crucial for shipping companies.