The suspension of shipping in the Red Sea is bound to cause delays – but how big? And is it only caused by increased sailing times? What can customers expect in this situation? Comment by Przemysław Komar, Seafreight Product Director – CEE at Rohlig SUUS Logistics.
The situation we are seeing in the Red Sea is dynamic and tense. Even if the disruption of transport through the Suez Canal only lasts a few weeks, it will still be a strong shock to the market, which we will feel for much longer. The US has announced an operation in the region to reopen the canal. However, the situation is similar to the Ever Given ship incident that blocked the corridor in 2021. The closure lasted six days, while the resolution of congestion and restoration of smooth traffic on the route took several weeks.
Currently, most ships are diverted to the Cape of Good Hope route, in southern Africa. However, this option means an additional 3,500 nautical miles and a longer transit time of 7-10 days to European ports such as Rotterdam or Gdansk. Of course, this also entails higher fuel consumption and increased handling costs. This will ultimately lead to an increase in freight rates, but also an increase in the price of the transported goods, which the end customer will pay.
In addition, as mentioned above, the situation in the Red Sea could have a snowball effect. Ships that should be arriving in European ports soon are now sailing around Africa, so we can expect delays in deliveries in the first few weeks of 2024, in January/February. This will also translate into later departures of export goods scheduled during this period, as empty containers will be limited availability in the ports.
We should also bear in mind that extending transit times may require for the shipowners to add additional vessels to their fleets. While the vessels are there and their availability should not be a major problem, it is the oversupply of vessels – more specifically, of freight space – that has been a significant factor in the recent low level of freight rates.
An alternative to sea freight from Asia to Europe is rail transport, as well as air transport via the airports of Almaty and Astana. At SUUS, including the recently opened branch in Kazakhstan, we provide such a service for our customers.
The situation in the Red Sea demonstrates once again the importance of diversifying transport solutions to build resilient supply chains.