Navigating Global Logistics Challenges: Adapting To Disruptions In The Red Sea Routes
In light of recent geopolitical events, ocean vessels passing through the Red Sea have faced major route disruptions through piracy and attacks impacting a substantial number of ocean carriers. This has led to:
- Longer transit times
- Increase of shipping fees
- Reduced vessel sailings
- Indefinite pause of vessel operations
Thereby causing global impacts on the distribution of goods with predominantly being on the Americas, European, Gulf Coasts and Mediterranean markets. With this, we have had to be agile in our management of cargo and its routing.
Ocean Freight
The Suez Canal connects the Red and Mediterranean seas and has been the pathway of ocean vessels and general trade of goods between the East, West and Mediterranean countries. With sea freight being such a popular freight solution, we have recently seen vast disruptions through the targeting of some ocean vessels passing through these waters with some shipping firms diverting or suspending operations through the region.
However, sea freight solutions remain available through diverting routes around the Cape of Good Hope, with all freight solutions still being serviced (full container, RoRo, Breakbulk and less than container load (LCL))
Air Freight
The most time efficient shipping method, air cargo, is usually reserved for the transport of urgent and high value goods as it is not the most economical of methods. However, due to the current situation in the Red Sea, air shipping options through air consolidations, priority and charter flights are being utilised more and more.
While air freight rates have remained relatively stable in the post Christmas lull, it has not seen a rise in rates for the first time in 7 weeks leading up to the Chinese Lunar New Year and Valentines Day. It is important to note that the increase in rates due to the Chinese New Year is expected as factories in China close for the 8 day holiday and where aircraft are not being used in the East, we find that additional capacity has been allocated to Africa for the trade of Roses with Valentines Day coming up..
According to the Baltic Air Freight Index (monitors general weekly transactional cargo rates across certain routes), there has been a 6.2% increase in air freight fees. This has been seen mostly across cargo bound for Europe, avoiding the perilous Red Sea and the longer Cape of Good Hope routes. An increase in air cargo space being secured for the whole or partial shipping of goods via air (multi modal) has also been reported.
Multi Modal
Suppliers and Manufacturers who do not require urgent transportation of goods also have options for multi-modal. This is a mix of transportation modes (Ocean, Air, Road, etc.). This strategy may be used to:
- Move cargo to destinations where direct flights or shipping by sea is not an available option.
- Provide freight solutions that are more economical than direct air and more time efficient than sea shipping.
This transportation model is executed by sending cargo from origin to destination via a hub where the secondary/succeeding transportation leg may vary from the first leg transportation mode.
Previous transit time of sea freight via the Red Sea was sufficient to supply to Western and Mediterranean countries, but the alternative option of rerouting through the Cape of Good Hope takes too long to transport cargo. Due to this, we considered the changes and restrictions within the geopolitical environments such as Turkey and Jordan to transit cargo by Air or by Road to the Western and Mediterranean countries. Other alternatives to avoid the Red Sea route are:
- Sea and Air. For example, to send goods from Southeast Asia to the Jebel Ali, UAE hub by ocean then continuing by air to its final destination.
- Land and Air. For example, by trucking the shipment to a hub in Saudi Arabia and then continuing by air to its final destination.
How can ACI Logistics help?
Though alarming, the current climate in the Red Sea has not completely deterred the shipping and logistics industry. ACI has been able to map out and partner with various hubs around the world to enable their clients to move their cargo where they need with the reassurance and peace of mind that it will be on time and intact.
Get in touch with our team here and they will talk you through our adapted shipping routes.