95% of container ships that would’ve transited the Red Sea are now going around the Southern Tip of Africa. The ships diverting from their ordinary course are marked orange on the Flexport map below.
Even if you’re not in Europe, you will begin to feel this. It will delay vessels everywhere. Costs will go up, and there will be inventory issues.
Ocean freight prices to the US west coast are already up 50%. East Coast even more.
As of January 5, carriers maintain their routing south of Africa for almost their entire fleet except CMA which has continued using the Red Sea. Maersk, who previously elected to return to Red Sea transits and then paused, is now turning vessels away from the risk areas to transit the Cape of Good Hope. The Shanghai Containerized Freight Index’s (SCFI) publication shows rate increases, but not to the magnitude seen in the market.
Callouts:
- As of January 5, 389 container vessels accounting for 5.4 million TEUs of capacity (~22% of global capacity) are actively diverting, will divert, or have already diverted the Suez Canal. This is out of ~664 vessels that typically transit the Suez Canal.
- When considering carrier stances on Red Sea transits, it is important to note that vessel decisions are ultimately made by the vessel operator, and cargo with other carriers with slots on the vessel will be impacted by the decision. However, vessel-sharing agreements between carriers can influence the routing decisions of vessel operators as vessel utilization is key. For example, a vessel operator may be influenced by vessel-sharing agreements to use Cape Of Good Hope to maximize vessel utilization if their partners refuse to load on Red Sea vessels due to risk.
- The January 5th publication of the Shanghai Containerized Freight Index (SCFI) showcases the following increases:
- Shanghai to North Europe: +7% since Dec 29 and +179% since Dec 15
- Shanghai to the Mediterranean: +4% since Dec 29 and +131% since Dec 15
- Shanghai to U.S. West Coast: +9% since Dec 29 and +53% since Dec 15
- Shanghai to U.S. East Coast: +10% since Dec 29 and +40% since Dec 15
- While the SCFI shows increases, the magnitude is lower than what we see in the market. In times of high volatility, it is difficult for indices to keep up with the market freight rate changes. This was particularly apparent during the COVID economy. For example, the Drewry Container Index saw week-over-week increases of 115% from Asia to Europe and 25-30% from Asia to the U.S.
- Premium rates will come at higher levels to guarantee equipment and loading. We’re hearing about some carriers announcing premium levels at over $10,000 per 40-foot container into the U.S. West Coast for the second half of January.
- Rate increases have cascaded into the Transatlantic trade as well as we saw Maersk announce a peak season surcharge and CMA announce a rate restoration initiative.
- To a certain extent, shippers have their hands tied if they need goods in the next three months. They can either accept high rates now or delay cargo and have to navigate equipment shortages post-Lunar New Year which will also lead to elevated rate levels.
Updates on the Suez Canal: Carriers Continue to Reroute Vessels To Avoid Attacks
1 pm ET / 10 am PT, Thursday, January 4th
Attacks on vessels in the Red Sea, Gulf of Aden, and coast of Somalia continue. On January 2, Houthi forces launched two missiles at CMA CGM Tage in the Red Sea. On January 4 at 10:25 AM EST, the United Kingdom Maritime Trade Operations reported that “5 to 6 unauthorized armed persons have boarded a merchant vessel” 460 nautical miles east of Somalia. Carrier routings continue to fluctuate with most avoiding the at-risk areas.
Callouts:
- As of today, 389 carrier vessels accounting for 5.4 million TEUs of capacity are actively diverting, will divert, or have already diverted from the Suez Canal as a direct result of these attacks.
- After Maersk’s decision on December 31 to re-pause transits through the high-risk areas, they are now diverting vessels that were idling south of the Gulf of Aden towards the southern tip of Africa.
- COSCO is also now routing most vessels around the Cape of Good Hope but continues to assess on a vessel-by-vessel basis. See the below visual in which COSCO’s vessels are in yellow.
- Some carriers are deploying vessels that typically service other trades like Asia to North America and LATAM to Asia to Europe trades to compensate for service disruptions. Today alone, we saw 4 vessels across HMM and Hapag-Lloyd accounting for 33k TEUs of capacity that will be deployed on the Asia to North Europe and Mediterranean trades.
- Vessel deployment will help, but not solve capacity constraints. Equipment shortages at origin ports are expected to rise in the coming weeks as the impacts of service disruptions make their way downstream.
- The military coalition aimed at protecting the risk areas now consists of 12 nations. On Wednesday, the coalition warned Houthis of ‘consequences’ for continued attacks in the region. From the White House, “The Houthis will bear the responsibility of the consequences should they continue to threaten lives, the global economy, and free flow of commerce in the region’s critical waterways.”
WHY is that happening?
Because Joe Biden is a WEAK ****-up, and everybody in the world KNOWS Joe Biden is a WEAK ****-up, because he broadcasts it to the world, starting with his run for his life from Afghanistnam.
He has our military spending all its time learning each others personal pronouns, while being schooled on what differentiates someone who is gay from someone who is queer, and catering to men who want to be women by giving them sex change operations at our expense.
He has sent our ammunition to Ukraine where he is not winning his war of choice against Putin and Russia.
The Iraqi prime minister want to kick his sorry ass out of Iraqinam.
So the inevitable has happened, and big surprise that to anyone who knows history.
In a Newsweek article titled “Biden Warns US Military May Get Pulled Into Direct Conflict With Russia” by Kaitlin Lewis on 30 December 2023 the caitiff fool Biden was heard screeching like Chicken Little that the sky was going to fall (cue Running Scared by Roy Orbison
https://www.youtube.com/watch?v=WBAqXtaPZgQ ), and showing off his pitiful weakness to everyone out there in the candid world, including in the Middle East, as follows:
President Joe Biden warned that the United States is at risk of being pulled into a direct conflict with Russia if the Kremlin succeeds in its war against Ukraine.
“The stakes of this fight extend far beyond Ukraine,” Biden reiterated Friday.
“They affect the entirety of the NATO alliance, the security of Europe, and the future of the transatlantic relationship.”
“When dictators and autocrats are allowed to run roughshod in Europe, the risk rises that the United States gets pulled in directly.”
“And the consequences reverberate around the world.”
“We cannot let our allies and partners down.”
“We cannot let Ukraine down.”
“History will judge harshly those who fail to answer freedom’s call.”
end quotes
Oh, BULL****, Joe – and you’re full of it!
Answer freedom’s call?
Ukraine is hardly free – its Constituti0n has been suspended, and talk about dictators and autocrats being allowed to run roughshod in Europe, that’s a direct reference to Biden’s PUPPET DICTATOR in Ukraine, Vladimer Zelensky.
And “We cannot let our allies and partners down?”
Oh, really, Joe, well how about this then:
From pp.366,367, A BETTER WAR, The Unexamined Victories and Final Tragedy of America’s Last Years in Vietnam by Lewis Sorley:
In 1974 (Vietnamese) President Thieu sent General Cao Van Vien to Washington to make the case for continued U.S. aid to South Vietnam.
At the Pentagon, where Vien briefed on the current military situation, complete with photographic evidence of mounting enemy violations and massive movement into South Vietnam, he was assured of full support.
On 6 May 1974 a legislative amendment proposed by Senator Edward Kennedy – one of those members of Congress most determined to pull the plug on South Vietnam – was accepted.
It cut $266 million for South Vietnam from a supplementary military aid bill and signified, suggested (Sir Robert) Thompson, “that perhaps the major lesson of the Vietnam war is: do not rely on the United States as an ally.”
end quotes
THAT IS YOUR WORTHLESS DEMOCRATS, Joe, who sold out Viet Nam, and in 1974 when that happened, Joe, YOU were a DEMOCRAT in the senate along with Kennedy, and the people of Ukraine were fools and idiots to get into bed with you and the flaming A-HOLE Tony Blinken and his idiot sidekick Jake Sullivan, and in the meantime, the candid world watches and waits while Joe Biden makes America weaker and weaker and weaker, which takes us back to that Newsweek article as follows:
“I (speaker Johnson) have asked the White House since the day that I was handed the gavel as Speaker for clarity.”
“We need a clear articulation of the strategy to allow Ukraine to win,” Johnson added.
“What the Biden Administration seems to be asking for is billions of additional dollars with no appropriate oversight, no clear strategy to win, and none of the answers that I think the American people are owed.”
end quotes
But Joe has NO STRATEGY, because Joe is a witless fool who knows absolutely NOTHING about war fighting, and he has surrounded himself with more fools who know less than he, and while he and his partner Karmela Harris allow TERRORISTS to pour into this country across his open southern border while forcing us to have to give them free food, free shelter and free medical care, he has NO STRATEGY to deal with the mess he and Obama and Blinken and Sullivan created in the Middle East, and the Houthis are well aware of it.
DO YOU WANT TO LIVE IN A CRIME-RIDDEN THIRD-WORLD ****HOLE WITH A WEAKLING IDIOT IN CHARGE?
BIDEN/HARRIS 2024!
FJB!
” Islam in a man is as dangerous as rabies in a dog ”
Winston Churchill
To me it seems certain that the fatalistic teachings of Muhammad and the utter degradation of women is the outstanding cause for the arrested development of the Arab. He is exactly as he was around the year 700, while we have kept on developing.
-George Smith Patton, Jr.