Cover Story
While US strikes against Houthi rebels in Yemen continue and few shipping lines brave Red Sea transits , container carriers are adjusting their service networks to the longer routes around the south of Africa . For sailings from Asia to the Mediterranean , North Europe and US East Coast , the best-case transit time is around 40 days , according to maritime consultancy Drewry .
“ Some believe this congestion can begin within [ the ] next four to six weeks .”
The impact on North American and European ports thus far has been minimal , but carriers and forwarders aren ’ t ruling out a sting from the so-called supply chain bullwhip if demand is stronger than expected after China ’ s traditional manufacturing slowdown during Lunar New Year festivities .
“ We ’ re already hearing that the dwell time is starting to tick up on the [ US ] rail side . We need to make sure we have an available fleet of chassis and readily available terminal appointments to be able to move containers out of the terminals as quickly as possible ,” Jon Gold , vice president of supply chain and customs policy at the National Retail Federation , told the US Congress on Jan . 30 . “ Some believe this congestion can begin within [ the ] next four to six weeks .”
Smaller shippers — particularly those without longterm contracts — are feeling the sharp end of the pricing stick , while larger retailers with significantly less exposure to the spot market are much better insulated , added Gold .
Questions from US importers on the scale of surcharges tied to the Red Sea situation and whether they fairly reflect carriers ’ higher operating costs spurred the US Federal Maritime Commission to schedule a hearing for Feb . 7 .
That ’ s all straining the container shipping system , but hardly breaking it , though it will be several weeks before the enormity of the dislocation of ships and equipment becomes clear . Unlike during the COVID-19 pandemic , there ’ s plenty of vessel capacity to mitigate the network changes , Bud Darr , executive vice president of maritime policy and government affairs at MSC Group , said during the Jan . 30 hearing .
“ It is extremely complicated , particularly to adapt global networks quickly ,” Darr told Congress ’ Subcommittee on Coast Guard and Maritime Transportation . “ But we are making it work . Commerce is flowing .
Gauging the impact
Mediterranean Shipping Co . ( MSC ) and its 2M Alliance partner Maersk , for example , have made significant changes to their service networks — particularly on Asia – Europe and Middle East routes — slashing port calls across the Middle East and Mediterranean . MSC has suspended its West India – US East Coast service and pulled out of a Middle East – East Mediterranean loop operated with CMA CGM and Cosco Shipping . For services from Asia to the US East Coast , MSC and Maersk reset rotations and schedules through the end of March to divert away from Red Sea .
“ The situation in and around the Red Sea – Gulf of Aden is deeply volatile with all available intelligence at hand confirming that the security risk continues to be at a significantly high level ,” Maersk said in a Jan . 24 statement announcing the service changes . “ While we continue to
12 Journal of Commerce | February 12 , 2024 www . joc . com