News / Shippers 'at a loss' as Red Sea ripples spread across container trades

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“Deep repercussions” from the “ripple effects” of the Red Sea crisis have surprised shippers, according to Global Shipper’s Forum director James Hookham, but there may be light on the horizon.  

“[The Red Sea crisis] introduced what we thought would be a one-off hit of delays as routings re-adjusted to an extra seven-to-10-day delivery time. And I think the expectation was, once the roots were reconfigured, things would settle down,” he says on the latest Loadstar Podcast. 

“But the ripple effect has been huge… Singapore, of all ports, becoming hyper-congested and brought to a standstill was never in the script,” he added.  

And he told host Mike King that shippers had been surprised by “just how deep the repercussions are”.  

Indeed, the cyclical effect of longer lead times, low capacity, equipment shortages and port congestion have all led to astronomically high rates and low schedule reliability.  

“Something’s going on which we poor shippers are at a loss to understand,” said Mr Hookham. 

However, recent Xeneta data indicated that ocean-shipping volatility could be easing, due to the narrowing spread between rate highs and lows on the short-term market.  

“In periods of high volatility, the spread between the market low and market high increases. This is because shippers and freight forwarders, and to a certain extent carriers, must react quickly in the face of supply chain uncertainty. 

“The contrasting priorities of these three key stakeholder groups place pressure on the market in different ways,” the analytics platform said.  

But, according to its crowd-sourced data, on the Far East to US East Coast trade the high-low spread “narrowed considerably” from 24 July, to $1,730 per 40ft, from $5,450 at the end of June. 

This was due to the market low increasing by $5,600 between 30 June and 24 July, to stand at $9,100, and, at the high end of the market, the growth in spot rates had slowed significantly. 

But while the major front-haul trades out of the Far East “tend to follow the same trends during a black swan event or market spike”, there can be notable differences in the development of market spreads. 

The spread on the Far East to Mediterranean increased by $1,000, to $3,000 from the end of April to 24 July. 

“This demonstrates why it is so important for shippers to understand their own market position across each of the trades they use to move containers,” explained Xeneta.