More major ocean carriers have halted their ships from entering the Red Sea as concerns of escalating attacks on vessels in the waterway’s chokepoint mount. The suspensions came as more commercial vessels have come under fire.
Citing safety concerns due to recent attacks, major shipping companies have suspended all Suez Canal routed services. The sudden route diversions around the Cape of Good Hope will add 7 to 10 days to the transit time for cargo destined for U.S. East Coast and Gulf Coast ports, depending on the vessel's pre-diversion position.
Due to the sudden schedule changes, many ocean carriers have not updated transit times for ships already heading to East Coast and Gulf ports. We're actively identifying all shipments affected by the service changes and will update PEERPLUS with new ETAs as soon as they become available.
What are the short-term market impacts?
- Due to daily restrictions on Panama Canal transits, many ocean carriers were rerouting their services to the Suez Canal. This means the only remaining option for reaching USEC and Gulf ports is the longer route around the Cape of Good Hope. Expect significantly extended transit times throughout the first quarter of 2024. To account for these delays, please add 7-14 days to the current lead times for US imports and 14+ days for exports. These are preliminary estimates, and actual ETAs may vary. Please check PEERPLUS for the latest updates.
- Plan for a surge in short term import market rates through Chinese New Year. Ocean freight shipping rates are expected to jump significantly in the lead-up to the holiday which begins February 10th, 2024. This comes on top of two recent price hikes: a December 15th general increase and another planned for January 1st. Major shipping lines have announced additional increases early in the new year, with rates going up by $1,000 per 40-foot container on both January 1st and 15th. While the final price hikes might be slightly lower, expect import costs to roughly double compared to early December.
- U.S. import capacity is expected to be tight throughout the first quarter of next year. This is because many shippers are trying to avoid longer lead times and higher shipping costs to East Coast ports. It is unclear how quickly ocean carriers will be able (or willing) to add more ships to their East Coast and Gulf services to maintain their weekly schedules. However, with Chinese New Year approaching, we can expect to see additional cargo ships deployed to take advantage of what are likely to be attractive freight rates for ocean carriers.
Should you need further information or have any concerns or queries, please contact your local Laufer customer service or sales representative, as well as continuing to visit our INSIGHTS and NEWS pages for the latest information.