Market News

INDURA

The Red Sea Conflict: Impact on Shipping Industry and Price Surge

We at INDURA are closely monitoring the ongoing conflict in the Red Sea, which is significantly disrupting the shipping industry. Due to this conflict, ships are being rerouted around the southern tip of Africa, leading to substantial disturbances in the freight market and prompting major shipping companies to announce significant price increases.

Typically, the Suez Canal handles about one-third of the world's container freight. This rerouting results in increased fuel costs for each round trip between Asia and Northern Europe, causing delays and higher freight rates.

Even though the situation is gradually starting to stabilize, unfortunately, it continues to affect global shipping and logistics. This means that all container ships are now sailing south of the Cape of Good Hope in Africa. Consequently, there is a notably prolonged transit time from the Far East to Europe as numerous cargo ships fail to reach the port in time for unloading before the feeder departs.

The need for increased capacity due to rerouting has led carriers to implement various additional charges and general rate increases. These charges, varying significantly across carriers and routes, include War Risk Surcharge, Contingency Adjustment Charge (CAC), Transit Mitigation Surcharge (TMS), Emergency Peak Season Surcharge (EPS), and Emergency Risk Surcharge (ERS). These fees can range from $400 to over $5000 in some cases.

The spot market (SCFI) peaked in mid-January due to the situation in the Red Sea, but in the past four weeks, it has continued to decline. Since January 12, 2024, the index has fallen by just over $450. This corresponds to a decrease of 14.6%.

We are diligently following the situation and will keep you updated. Should you have any questions, please feel free to contact us.

Best regards,


The INDURA Team

Contact

Jakob Nielsen

Sales Manager Denmark

Jasmin Dervic

Sales Manager Europe

Gowtham Theiventhiran

Sales Manager Nordic