Navigating the Freight Surge: A Closer Look at the High Shipping Rates in 2024

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As we cruise into June 2024, the global shipping landscape remains tumultuous, with freight rates riding a steep wave. If you're wondering why shipping costs have escalated, you're not alone.

Let's dive into the core reasons behind these soaring freight rates and explore what we're doing to help you navigate these rough seas.

Why Are Freight Rates So High?

TL;DR: It's a chain reaction.
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Geopolitical conflicts have thrown a wrench into traditional shipping routes, leading to longer and costlier detours. A shortage of empty containers returning to Asia, coupled with a spike in U.S. online shopping from platforms like Temu and Shein, has caused significant port congestion and delays. Although the Trans-Pacific route isn't directly impacted, the ripple effects are driving up global shipping costs.
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Freight Container Volumes via the Red Sea 2024 June Freight Cost ALNA Packaging

Freight volumes through the Red Sea have dropped significantly, deviating from expected levels. This decline is due to rerouting and increased security risks, leading to a considerable dip in container traffic.

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Container rates have spiked across several key routes, with costs escalating rapidly. The Shanghai to Genoa, Shanghai to Rotterdam, and Shanghai to Los Angeles routes have all seen dramatic increases in container shipping rates since early 2024.

What We're Doing to Help

While we can’t control every aspect of the high seas or the global landscape, our experienced team works tirelessly to manage your shipments with efficiency and cost-effectiveness in mind.

1) Stocking Up
We're preparing inventory at local warehouses for quick dispatch, ensuring you have access to supplies when you need them.

2) Negotiating Rates
Leveraging our network, we're securing the best possible rates to keep your costs in check.

3) Providing Updates
Timely updates and proactive solutions are our top priorities. We're keeping you informed every step of the way.

4) Cost Sharing
To minimize the impact, we're absorbing some of the shipping costs ourselves.

Together, let's chart a course through the storm and ensure your products reach where they need to be.

Appendix: What's Driving the Surge?

Events	Details
Houthi Attacks	Since November 2023, over 40 ships have been attacked in the southern Red Sea, causing significant disruptions.
Rerouting	Ships are rerouting to avoid high-risk areas, adding 4,575 nautical miles and 12 days of sailing time between Shanghai and Rotterdam. This detour increases the total sailing distance by 29%.
Suez Canal Revenue Loss	The Suez Canal has faced an estimated loss of $175-350 million USD in transit fees from December 2023 to January 2024, with a 40% reduction in toll revenues in early 2024.
Surcharges	Carriers have introduced various surcharges, including the 'Red Sea Charge' ($2,700 USD/FEU) and 'Transit Disruption Surcharge' ($400 USD/FEU).
Online Shopping Surge	A 30% rise in demand for goods from Asia to the U.S. is straining supply chains.
Box Availability	A shortfall of approximately 780,000 TEUs in Asia just before the Chinese New Year has exacerbated container shortages.
Emission Increase	There's been an estimated 42% increase in emissions for individual vessels and 67% for the fleet needed to maintain weekly services.
Spot Freight Rates	The Shanghai Containerized Freight Index (SCFI) has surged from 707 USD/TEU to 3,103 USD/TEU (+339%). Other routes have seen similar increases, with the Mediterranean route up by 252% and the ECNA route reaching 5,813 USD/TEU.

References:

Al Jazeera. (2024). Mapping Red Sea Shipping Attacks. https://interactive.aljazeera.com/aje/2024/mapping-red-sea-shipping-attacks/

CNBC. (2024). A sudden container crunch is sending ocean freight rates soaring. https://www.cnbc.com/2024/05/23/a-sudden-container-crunch-is-sending-ocean-freight-rates-soaring.html

Kiel Institute for the World Economy. (2024). Freight volume in the Red Sea continues to decline; fewer ships in Hamburg. https://www.ifw-kiel.de/publications/news/freight-volume-in-the-red-sea-continues-to-decline-fewer-ships-in-hamburg/

Notteboom, T., Haralambides, H. & Cullinane, K. (2024). The Red Sea Crisis: ramifications for vessel operations, shipping networks, and maritime supply chains. Maritime Economics & Logistics, 26, 1–20. https://doi.org/10.1057/s41278-024-00287-z