Suez Canal Update – Maersk suspends Red Sea transits

Yesterday, the world’s second largest ocean carrier announced it will suspend transits through the Suez Canal and Red Sea following a series of attacks on one of its containerships over the weekend. The shipping line will reroute ships around Africa’s Cape of Good Hope.

While many major carriers had already suspended Red Sea transits amid escalating, indiscriminate, rebel attacks, Maersk opted to resume services with the belief that a U.S.-led military force, Operation Prosperity Guardian, would allow safe passage through the problem zone.

Today, ocean carrier CMA CGM had another vessel attacked in the Red Sea, CNBC’s Lori Ann LaRocco reported on LinkedIn.

InterlogUSA will continue to monitor the situation closely.

IMPORT: Asia to North America (TPEB)

Recent Developments:

• Major carriers implemented general rate increases (GRIs) on January 1. These increases are in play for most services from Asia to all U.S. coasts. In some cases, rates have risen as much as $1000 per 40-foot container unit.
• New surcharges have also been imposed on transits through the drought-hit Panama Canal.
• Eastbound services from Asia remain challenged as carriers indefinitely withdraw ships from transiting the Suez Canal amid attacks on commercial vessels. As a result, the longer, bypass, routing around Africa will increase transit times, raise rates, and tighten capacity on weekly services.

Rates: Rates are elevated following New Year’s Day GRIs. Longer transits (avoiding the Suez) will increase shipping demand measured in ton-miles (volume multiplied by distance), a factor which can propel rates further upward.
Space: Space is generally open, but certain services have seen tightening.
Capacity: Longer transits averting the canals will absorb vessel capacity in order to maintain weekly services.
Equipment: There are no outstanding equipment deficits or bottlenecks.

TIPS:

• Hold your logistics partners accountable for frequent updates regarding current market conditions and routing impacts.
• Establish a firm timeline for future import activity.

IMPORT: Europe to North America (TAWB)

Recent Developments:

• The European Union’s Emissions Trading System (EU ETS) went into effect on January 1. The program requires ocean carriers to report their CO2 emissions and submit an allowance per ton of CO2 emitted.
• Ocean carriers are implementing ETS surcharges onto trade lanes to and from E.U. countries to cover these newfound costs. While these surcharges are subject to change, refer to our blog for estimates on what certain carriers will be charging.

Rates: Rates are steadily rising, however they’re not as high as they were in early December.
Space: Space is open.
Capacity: Capacity remains plentiful. No major adjustments from carriers, yet.
Equipment: Availability on both origin and destination sides, unless advised otherwise.

TIPS:

• Book at least three weeks prior to the ready date.
• Communicate with your logistics partners to ensure that you’re up to speed on the EU ETS program and its evolving impacts on transatlantic trade.

EXPORT: North America to Asia

Recent Developments:

Rates: In general, rates have mostly settled at a low mark. Capacity: Schedule reliability can be fickle in pockets.
Equipment: Rail car availability issues have softened.

TIPS:

• Insufficient communication with sailing schedules can lead to higher detention and demurrage fees as well as higher trucking and storage costs. Ensure your logistics partners are not keeping you and your cargo in the dark.