The Red Sea crisis: what does it mean for shipping?

12 Jan 2024 | Icon Move

The start of 2024 has seen freight rates rising sharply, which will have a knock-on effect for global relocation and removals services and especially for shipments between Asia and Europe. Although rates are not at the levels seen during the Covid pandemic, the sharp rise is significant.

The increase is being driven by container ships being diverted away from the Red Sea as a result of recent attacks in the area by Houthi rebels based in Yemen. Since 18th November, the Houthis have carried out more than 20 attacks on commercial vessels in the Red Sea and the Gulf of Aden. However, the attacks have escalated in the first weeks of January which has resulted in the worsening situation. After Houthis militants attacked one of Maersk’s vessels on 1st January, the major Danish shipping line has halted cargo movements within the area. Many other companies have followed suit. Shipping routes between Europe and Asia are returning to the days before the Suez Canal was completed in 1869 and being diverted south of Africa, around the Cape of Good Hope, adding thousands of miles to the journey of every vessel.

What is the impact?

Delays in shipments arriving

The Suez Canal was built to save huge amounts of time in journeys. With the canal now not being used, shipments are taking roughly 10 days extra (depending on the speed of the ship). If you have belongings that are currently in transit, expect them to be delayed due to the added journey time.

Lower availability of vessels

With ships spending significantly more time at sea, it means there are fewer ships available to take new shipments. The will lead to further delays at ports, and previously published sailing schedules being scrapped and re-worked.

Rising freight rates

As the demand for vessels outstrips the available supply of them, freight rates are increasing significantly as a result. Shipping lines have increased the rates for any shipments heading through the affected region, but are also adding additional costs to other shipments to spread the burden. So freight rates from UK to the East Coast US are also affected. This is on top of the already rising freight prices to the US West Coast due to droughts in the Panama Canal. As shippers try to utilise air freight more to relieve the burden on sea freight, these costs are now increasing too.

Availability of temporary accommodation

The impact may also have a wider knock-on effect for the availability of temporary accommodation, as people wait longer in temporary accommodation for the arrival of their shipments. Temporary accommodation may be more difficult to come by and more expensive.

We’re Here to Help

Our Icon Move staff are highly knowledgeable in the changing market. They are working hard to keep all our clients and assignees updated on the situation as it progresses. If you have any questions, please do speak to your move manager.

 

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