Most container carriers are continuing to divert their vessels away from the Red Sea even with the US-led international naval task force patrolling.
Houthi attacks on commercial vessels continued last week, including a missile attack and attempted hijacking of a Maersk container ship — a significant development as Maersk was one of two carriers to recently announce it would reroute back through the Suez Canal.
Maersk and CMA CGM had resumed some Red Sea sailings as of late last week and announced that they would gradually return in full when possible.
But following the attack on Saturday, Maersk suspended all its Red Sea transits until further notice.
Threats of port congestion
In an analysis, Judah Levine, head of research at Freightos, said the longer voyages for diverted services mean longer lead times for importers and some threat of port congestion if updated schedules can't be maintained and multiple vessels arrive at once, though so far, there have not been reports of backlogs.
"The excess capacity that carriers were contending with before the Red Sea disruptions will now be activated to use more ships than usual per service to try and keep up with departure schedules and keep containers moving," Levine added.
The analysis noted that some carriers are shortening the "free time" North American import containers are allowed to sit at destination ports in an attempt to speed up the return of empty containers and avoid equipment shortages at Asian origin ports, as empty containers will now take longer to get back to export hubs.
The diversions are also causing ocean rates to spike.
The Freightos head of research said Asia - North Europe rates have increased 173% compared to just before the diversion announcements, to more than US$4,000/FEU. Asia - Mediterranean prices have doubled to more than US$5,000/FEU.
These rates are more than double the prices in January 2019.
Other carriers have announced increased rates on impacted lanes.
Freightos said CMA CGM announced that Asia-Mediterranean rates will increase to more than US$6,000/FEU on January 15.
Carriers have also announced surcharges ranging from US$500 to as much as US$2,700 per container, which could push the all-in prices paid by shippers even higher.
Rates to N. America's East Coast have climbed 52% to US$3,900/FEU, 30% higher than in 2019.
Some carriers have added significant surcharges for India - N. America containers and US$500/FEU surcharges for all Asia - N. America shipments starting in mid-January, though surcharge announcements for N. America have not been widespread so far.
Meanwhile, prices to the West Coast have also increased sharply, climbing more than US$1,000 per container to US$2,713/FEU, possibly reflecting some anticipated shift in demand to the West Coast to avoid the increased transit time to the East Coast.
Rates are still lower compared to the pandemic peak
"With surcharges, if all-in prices reach the US$5k - US$8k per container range for these major ex-Asia trade lanes, those rate levels would be 2.5 to 4 times above normal levels for this time of year," Levine said.
"But compared to the pandemic years, carriers have the available capacity to address diversions and longer voyages," he added.
The additional costs and capacity taken up by the longer transits are pushing rates up significantly, but even at US$5,000 - US$8,000/FEU, Asia - N. Europe and Mediterranean prices would be 45% - 65% lower than their US$14k/FEU pandemic peak in late 2021, and 65% - 75% lower compared to the Asia - N. America East Coast peak of US$22k/FEU.
The Freightos analysis also noted how, in air cargo, some analysts are expecting the delays in ocean freight to lead to some shift of more urgent volumes to sea-air services or air cargo alternatives.
However, Levine said so far, there had not been reports of any significant air cargo bump, though.
Freightos Air Index rates for Asia - N. America have remained level, while Asia - N. Europe prices decreased last week to their lowest level since August of last year at about US$3.00/kg.
The Houthi missile attacks have continued into the New Year, and the US responded to the most recent attack on a Maersk ship by sinking three Houthi boats approaching the vessel, reportedly killing ten.
International tensions are also rising as the UK is considering targeting Houthi positions in Yemen, and Iran moved a warship to the Red Sea on Sunday, stating that Iranian naval vessels have periodically been in the Red Sea "to secure shipping lanes, repel pirates, among other purposes since 2009."
