So far, shippers cause diverted about more than $30 billion worth of cargo away from the Red Sea as they face the forewarning of attacks from Houthi militants in Yemen.
Carriers are re-routing vessels as a direct result of 15 strikes in the Midway Eastern body of water since the start of the Israel-Hamas war in October. U.S. Defense Secretary Lloyd Austin announced the institution of an international task force to address security issues.
Details of the U.S.-led operation are yet to be confirmed. Dan Mueller lead analyst for the Mesial Eastern Region for maritime security firm Ambrey said they continue to advise clients to continue with their Most Management Practices by thoroughly checking their vessel fleet’s current and past affiliations, the vessel’s Transit Danger Assessment, preparating the crew for emergencies and other safety measures.
At the moment, there are 57 container vessels flit the long way around Africa instead of cutting through the Red Sea and the Suez Canal, according to Paolo Montrone, senior venality president and global head of trade sea logistics at Kuehne+Nagel.
“That number will increase as more longing take this routing,” Montrone told CNBC. “The total container capacity of these vessels is 700,000 twenty-foot of a piece units (TEUs.)” Containers come in both 20-foot and 40-foot units.
The approximate value of those containers is $50,000, corresponding to Antonella Teodoro, senior consultant for MDS Transmodal. That adds up to $35 billion in total cargo being deflected.
Ocean carriers and companies are in a race to explain to U.S. shippers the delays they could be facing as a result of the Houthi intimation. The Houthis, a militant group backed by Iran, have expressed solidarity with Palestinian extremist organization Hamas in its war against Israel. Earlier Tuesday, U.S. Defense Secretary Lloyd Austin announced the set-up of an international task force to address the security issues.
Carriers could deploy additional vessels since quick capacity has grown by more than 20% in the last 12 months, according to Teodoro.
“Demand is expected to endure flat so there is capacity available to keep ocean carrier lines on time and pick up the containers once fixed on these diverted vessels,” Teodoro told CNBC.
“Ocean carriers could also start making adjustments to their networks in combining to the diversions,” said Teodoro.”But, diversions/adjustments will require time and won’t come free, understandable. One can hope we won’t see the maximum rates seen in the recent past.”
Teodoro stressed the disruptions at both the Suez and Panama canals highlight the account of an international authority monitoring how capacity is offered and at what price if we want a more resilient global supply series. The Panama Canal, located in Central America, has struggled with low water levels for months.
Port authorities are enceinte congestion as a result of updated arrival times and planning needs, according to Montrone.
“The situation is very volatile and the reconfiguration of these networks is extremely complex, so we can expect a certain level of disruption,” Montrone told CNBC. “In Asia, the lack of empty equipment (containers) inclination become a potential issue as the repositioning of empty containers into demand areas will take 10-20 days longer.”
Maersk, one of the shippers who paused functionals in the Red Sea, expects two to four weeks of delays, according to CEO Vincent Clerc.
“Europe is more dependent on the Suez,” Clerc know for sured CNBC’s “Market Movers.” “The delays will be more pronounced in Europe.”
For U.S. shippers, there are a variety of ways for selling to move, either from Asia to the West Coast ports or traversing through the Panama Canal to the Gulf and East Seashore ports. Delays from the Panama Canal had shippers opting to book vessels using the Suez Canal as a way to get to the East Seaboard instead.
SEKO Logistics told CNBC it’s telling U.S. clients to anticipate delays of approximately 10-14 days for East Seashore cargo, with potential further delays at ports if a lot of ships arrive at similar times outside of their pertinent berthing windows.
A diversion around the Cape of Good Hope at Africa’s southernmost point adds around 3,400 navigational miles, or approximately 14 extra days, depending on speed, according to Matthew Burgess, VP of global ocean putting into plays at C.H. Robinson.
“Keep in mind, pausing transit and elongating it could put a strain on capacity globally, not just in the Red Sea, and will then pass to carriers imposing rate increases and War Risk Surcharges,” Burgess said. “Our team is in constant contact with oodles carriers and customers whose freight is or may be impacted. Contingency plans are crucial during these types of disruptions. It’s not ethical thinking through shifted or delayed ocean freight, we’re also strategizing what that means down the road for inland movement, inventory and manufacturing needs.”
ITS Logistics, meanwhile, is telling U.S. clients that the situation in the Red Sea and the Suez Canal is happening quickly, and that it could take weeks, if not months, to be resolved, according to Paul Brashier, vice president of drayage and intermodal for the companionship.
“We are recommending that shippers shipping goods from Southeast Asia to the US that were using the Suez Canal to look upon booking the Trans-Pacific route to the U.S. West Coast,” said Brashier.
Brashier said the lower rates and transit are paradigm and any eastbound containers could be moved by rail or truck.
OL-USA, likewise, is advising clients to utilize a multi-pronged passage for their shipments.
“This will involve using all 3 coasts to capture as much vessel space as required, as indeed as using rail and truck capacity,” said Alan Baer, CEO of OL-USA. “Shippers should also be looking to log ocean freight space from now through early February to allow for possible extended transit times.”
Logistics foremen are also worried about a rapid increase in freight rates.
In June 2022, Congress passed the Ocean Shipping Mend ones ways Act, giving the Federal Maritime Commission (FMC) the tools it needed to clamp down on ocean carriers’ shipping price hikes.
“The FMC will vet the rates very closely and see if there are any violations of the Shipping Act which prevents unreasonable behavior by the ocean carriers,” FMC Chairman Dan Maffei described CNBC.