The continuing escalation of attacks on vessels at the Red Sea could trigger port congestion in many regions, and the upcoming Lunar New Year could further compound the shortage of empty containers, according to a new Global Freight Monitor of HSBC.

The report said the attacks in the Red Sea region have further intensified, and on January 3, Houthi militants claimed another attack on a CMA CGM vessel, which is the 24th attack on a merchant ship in the Southern Red Sea since November 19.

As a result, most shipping lines have re-routed their vessels from the Red Sea to longer voyages around the Cape of Good Hope (adding 1-2 weeks of delay).

This pushed rates to an "all-time high" —  (barring Covid-19) — according to the HSBC report, with the SCFI (Shanghai Containerised Freight rates) surging another 7.8% week-on-week on January 5 to the highest level since Oct 2022, fuelled by a rally in Asia-Europe routes.

"Barring the COVID-19 period, the SCFI and the SCFI Shanghai-Europe rates are at their highest level on record," HSBC's Global Freight Monitor said.

Shipping lines are also imposing surcharges to lift freight rates to as much as US$6,000/FEU on the Asia-Europe route as the Red Sea crisis continues.

The report noted seeing spot rates in other routes — including the transpacific — rise as a fallout.

"Indeed, the SCFI Shanghai-US rates have risen by over 50% since November."

In terms of what to expect moving forward, the report noted that about 19% of global container trade would be diverted with 7-14 days of additional transit time and 15-20% higher costs for carriers, citing data from Freightos.

"We caution that the unstable situation in the Red Sea could result in congestion at ports in other regions due to uncertain vessel schedules, and equipment shortages driven by the displacement of empty containers, which could be further compounded by the approaching Lunar New Year (LNY)," it said.

The report added that should the crisis remain unresolved in the next couple of weeks, elevated spot rates could lead to higher contract rates as liners are negotiating their annual contracts with retailers.

"This could potentially help prevent the sector profits from declining too much vs the expectations before the disruptions."

Meanwhile, the report said air and rail could benefit from the current disruptions in ocean shipping.

"Since rerouting via the Cape of Good Hope means longer voyages, shippers could seek other viable options such as air freight or rail if the Red Sea crisis is prolonged or uncertainty persists on when it could be resolved," the HSBC Global Freight Monitor further said.