Companies worried about supply chain issues are stocking up, causing shipping rates to soar. Shippers have had to contend with increased ocean container rates since May, when rates spiked sharply.
Inc.com reports companies have been stocking up since April. The Red Sea disruptions have made it difficult. In addition, tariffs on Chinese-made items will increase from August 1.
Companies will want to avoid similar effects when the Red Sea disruptions first start affecting the supply chain. In January, Locate2u reported that US mass market retailer Target experienced disruptions in the supply due to shipments from India and Pakistan.
Data released by Xeneta, an ocean and air freight rate benchmarking and market analytics platform, shows that average spot rates from the far East to the US East Coast increased by 3.7% on 15 July to stand at $US 10,045 per FEU (40-ft equivalent shipping container). On the US West Coast, spot rates increased by 2.0% to stand at US$8,045 per FEU.
Why is the Red Sea so important?
The Red Sea is a crucial corridor connecting the Mediterranean Sea, the Indian Ocean, and beyond. Its strategic location gives shippers access to Europe, Asia, and Africa. The Red Sea route is the natural sailing route between these regions.
Shippers cashing in early
The end of the year is not far off. Store owners will not want empty shelves over the holiday period. So, they’re getting in early on shipments.
With still no end in sight to the logistics storm at sea, Wall Street Journal reports import containers have been landing at American seaports in larger numbers than usual since the late spring.
The logistics industry has had its fair share of finding solutions to the Red Sea situation. From rerouting vessels to switching between transport modes to keep the supply chain moving.
Benefits of shipping air freight
- Speed: Companies may need stock urgently and choose air freight as it’s a much faster option than ocean freight. The Red Sea crisis may force manufacturers and store owners to look to air freight to prevent a serious shortage in their production line or store shelves.
- Reliability: Airlines run strict schedules, which make airfreight a reliable option for cargo. Fresh produce is often flown via airfreight, so items arrive fresh at their destination.
- Efficiency: Shipping by air freight is a great time saver. A manufacturer may need an urgent part to complete a project. Placing the item as air cargo will allow the manufacturer to save time instead of waiting a few weeks for ocean freight to arrive in port.
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About the author
Sharl is a qualified journalist. He has over 10 years’ experience in the media industry, including positions as an editor of a magazine and Business Editor of a daily newspaper. Sharl also has experience in logistics specifically operations, where he worked with global food aid organisations distributing food into Africa. Sharl enjoys writing business stories and human interest pieces.
