The cost to ship goods by container is on a rapid trajectory skyward as unrest and volatility in the Middle East has major shippers avoiding the Suez Canal and instead sending boats south around Africa.
Late last week, logistics giant Maersk announced it was diverting container traffic away from the Suez Canal citing the increased attacks by Houthi militants on vessel using the trade route. Maersk is certainly not alone, as other shipping companies have begun planning the much-longer route south, avoiding the canal.
With increased distance and significant time in transit comes increased costs, and last week the cost to ship via container from Asia to Europe saw a huge leap to US$4,000 — a 170+ per cent jump from just six weeks ago, according to Freightos.com, Bloomberg reports. Routing around Africa vs. going through the Suez can add more than 14 days to shipping.
In the context of the last three years, the total cost is not nearly the record-setting numbers reached during the height of pandemic container traffic mayhem; however, container freight rates had been relatively low heading in to December 2023.
Plenty of consumer goods move through the Suez Canal, so these products are likely to see upward price pressure first; however, the container movement system is global — as witnessed in late 2021, when the pulse industry called the global container traffic issue a crisis.
Continued unrest and risk along the Suez Canal shipping lane could also have significant impact on oil movement, as well.
Just last month, RealAgriculture shared about this looming issue, combined with issues with the Panama Canal and the U.S./Mexico border, impacting rail traffic. American rail traffic seems to be flowing again; however, these continued and global bottlenecks will undoubtedly have an impact on all goods — agricultural included — going forward.
