With the Red Sea diversions by shipping companies including Maersk continuing amid the risk of attacks by the Houthis, global logistics managers are faced with a two-front storm of rising ocean and air freight prices and stranded cargo. Both are threats to the global supply chain after three tumultuous years of inflationary pressures and delays from Covid disruptions which recently seemed to finally have been vanquished.
The ceiling in ocean freight prices shot up in a matter of hours on Thursday as a result of more vessels diverting from the Red Sea. CNBC has learned that logistics managers were quoted this morning an ocean freight rate of $10,000 per 40-foot container from Shanghai to the U.K. Last week, rates were $1,900 for a 20-foot container, to $2,400 for a 40-foot container. Truck rates in the Middle East now being quoted are more than double.
Alan Baer, CEO of OL USA tells CNBC while pricing is undergoing rapid adjustments as ocean carriers work to recover the added costs of diverting their vessels, these massive jumps in rates need to be clarified as the shipping community of importers and exporters, along with government regulators seek to better understand the overall drivers of these large increases.
“During Covid, we had a slower build-up in freight prices due to the impact the pandemic had on the global supply chain,” Baer said. “What we are experiencing here is a light switch event where vessels are being redirected in real time. But, that said, in certain trade lanes you are seeing freight rates going up between 100 to 300 percent. This does not appear to be totally driven by changes in supply and demand.”
ARM all ships !!!! solved
Launch Attacks on the ENEMY Houtis / Hamas / Iran / Hesbola / & the Rest EVERY TIME they attack us !!!!!
All on the obiden regime. They have fowled up a world economy that was performing well.
And there still is a huge backup at the panama canal. Lower than expected water tables. Plus the newer ships today are large (higher and wider) compared to when bridges, major canals where made in the 20th century. Cant fit or not enough water. Thats NOT a USA problem. Thats a world problem,.specifically with this shipping issue – big shipping needs to support building. Higher prices (greed) isnt the answer either since folks wont buy. Folks dont buy, there is no ordering…no ordering then ships dont run….ships dont run, there is no money to be made. Consumers need to reverse it on big corp and make them pay!
But we wont…need that new tv….cell phone….basketball shoes….golf clubs……or any item that DOESNT pay the bills.
Ships should have orders to kill on sight all Terrorists !!!!! ARM the ships !!!!