The Red Sea is obstructed! The industry is sparking a battle for containers

The Houthis' renewed attacks on commercial vessels in the Red Sea have triggered widespread concern in the industry. "MAERSK HANGZHOU" was attacked twice in just 24 hours and nearly boarded, an incident that has caused Maersk, which originally intended to resume the Red Sea route, to delay its plans once again. The world's major shipping companies are afraid that it will take a longer time to resume the route through the Red Sea - Suez Canal.

At the beginning of the New Year 2024, many customers are worried about the soaring freight rates, and have been urgently negotiating with the logistics industry about placing orders and booking space, or triggering a battle for containers.

As the Red Sea route cannot be resumed for the time being, shipping companies have begun requesting that cargoes originally planned for the Red Sea be rerouted. This means that original consignments will need to be adjusted and the transit time will need to be extended through the Cape of Good Hope. If customers do not agree with the re-routing, they will be asked to empty the cargo and return the container, and if the container is still occupied, they will have to pay an additional fee for extended use. It is understood that there will be an additional charge of $1700 per 20 foot container container and $2600 per 40 foot container.

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

Under the pressure of war and attacks, travelling the Red Sea has lost its attraction for customers if there is no price advantage, even if the cargo arrives earlier. Customers prefer to ship their goods as early as possible, and it is more important for them to choose to bypass the Cape of Good Hope to deliver their goods safely to their destination.

As the Red Sea crisis was a temporary event, some cargoes that had been contracted to travel through the Suez Canal still chose to wait for the opening of the Red Sea. However, in view of the uncertainty of resumption, shipping lines have issued notices requesting their customers to make a choice either to return the containers or to agree to re-route them. If they do not return the container, they must pay an additional fee for the use of the container.

Shipping industry analysts point out that the shipping market has been in the doldrums for nearly a year, with slow container scheduling and low inventories due to the previous slump. Now that we have encountered such an unexpected event, not only must the container shipping industry respond fully, but all exporters are also on high alert. The whole industry has been caught by surprise. The latest edition of SCFI also indirectly confirms that the soaring freight rates have become a fact.

Source: Maritime.com