Image: Maersk / FIS

Tensions in the Red Sea Lead to Increased Shipping Rates for Many Shipping Companies

According to information from some businesses, from January 2024, a series of shipping lines announced an increase in shipping rates to the US, EU and other countries. The reason is that tensions in the Red Sea affect the safety and transportation of many shipping lines, so they are forced to change itineraries, leading to longer transit times and increased costs....

A series of large shipping companies such as Yang Ming Line, One, Evergreen Line, HMM, Maersk... have sent notices that they will collect additional fees due to having to change itineraries on Asia - Europe routes, avoiding passing through the Suez Canal and Red Sea area.

Starting from January 2024, fees to the US/Canada and EU will increase significantly compared to December 2023. Specifically, West Coast (LA) increased by 800 USD - 1,250 USD, depending on the route. Specifically, in December 2023, the fare will increase from 1,850 USD to 2,873-2,950 USD for January 2024.

Source: The New Arab

The East Coast (NY) recorded a larger increase from 1,400 USD to 1,750 USD depending on the route. Specifically, in December 2023, the price was at 2,600 USD, increasing to 4,100-4,500 USD for January 2024.

Particularly, ship freight to the EU recorded a sharp increase compared to December 2023. Specifically, the fare to Hamburg costs 1,200-1,300 USD in December, increasing to 4,350 USD-4,450 USD in January 2024, more than doubling.

Source: BNN -->

The reason businesses say is that 80% of goods going to the East Coast of the US/Canada and the EU go through the Suez Canal. Due to Israel/Hamas tensions, the Houthi rebel group (Yemen) attacked ships entering the Red Sea to pass through this canal. Last December, ships of Maersk, MSC and CMA were all attacked. This forces lines to go around the Cape of Good Hope (South Africa), a journey that takes an additional 7-10 days. This leads to a longer ship turnaround, incurring more transportation costs, a ship turnaround takes about 2 weeks. Some shipping routes have had to cut some weekly shipments, leading to a lack of space or put more ships into operation, increasing costs.

This could be a new challenge for seafood businesses in 2024. If tensions in the Red Sea region continue or escalate, it could lead to increased transportation costs and input product prices for aquaculture. , seafood processing increases, affecting the competitiveness and profits of seafood enterprises.

Source: Namib Times

Regarding this issue, on December 28, 2023, the Import-Export Department, Ministry of Industry and Trade, issued official dispatch No. 1116/XK-TLH on limiting the impact of the situation arising in the Red Sea area.

The Import-Export Department (Ministry of Industry and Trade) requests industry associations and associations in the logistics field to strengthen monitoring and regularly update the situation so that businesses in the industry can firmly grasp the information to proactively plan production. export and import of goods, avoiding congestion and other adverse impacts.

Source: The Maritime Executive

The Import-Export Department recommends that import-export businesses closely monitor the situation, proactively make appropriate plans, and discuss with partners so that in case of necessity, the time for packing and receiving goods can be extended.

Businesses seek and diversify supply sources to limit the impact on the supply chain.

When signing and negotiating commercial contracts and transportation contracts, businesses should have provisions on compensation and liability exemption in emergency situations. It is necessary to purchase full insurance to prevent risks and losses when goods have to be transported for extended periods of time or encounter problems while traveling through this route.

Author: Kim Thu | Vasep (Translated from the original in Vietnamese)

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