What Does The Crisis In The Red Sea Mean For Sea Freight Shipping Rates - KTL UK

Red Sea crisis drives up rates, as some shippers look to air freight
Our team at KTL has continued to closely monitor the situation in the Red Sea since our previous update. Events have been fast-moving, although it has still been the case over the last few weeks that vessels making their way through the area have been subject to attacks from Yemen-based Houthi militants.
Now, the impacts of such disruption are rippling even more profoundly through global supply chains, including in the sea freight rate quotations received by some of those looking to transport goods efficiently across national borders.
Can you expect to have to pay more for international freight?
The short answer to that question would presently seem to be “yes”, although it must be emphasised that at the time of typing, this is still a situation very much in flux. It remains to be seen whether the crisis could persist for a few weeks, several months, or for longer than that – and of course, all of this could have major consequences for freight rates in the year or so ahead.
So, let’s provide a refresher on the things we do know as the situation presently stands. The Red Sea attacks have already prompted shipping companies to switch to alternative routes – and as reported by CNBC, longer detours around South Africa’s Cape of Good Hope have driven up ocean freight rates by as much as $10,000 (approximately £7,900) per 40-foot container.
Container ships have already reportedly diverted some $200 billion (£158 billion) of goods away from the Red Sea route they would have otherwise used. Intriguingly, it has also been reported that some shippers have turned to air freight as an alternative, thereby pushing up the rates for that particular mode of goods transportation as well.
A still-evolving and uncertain situation – so act accordingly
However, it is also important to apply some perspective to the situation that might go some way to reassuring those intending to work with a freight forwarding company.
Prior to the recent Red Sea crisis, global shipping container rates had more than halved compared to 2022, following a boom in the immediate “post-pandemic” period. And even with freight rates having comparatively soared lately amid the latest uncertain situation, the Freightos Baltic Index for 12th January 2024 was still “just” $2,613, compared to the more than $11,000 that had been recorded in the autumn of 2021.
So, although both air and sea freight rate quotations could remain higher for a while than they had been until fairly recently, some well-placed industry watchers are voicing caution, and suggesting it may still be too early to make definitive forecasts.
That is a sentiment we would very much back here at KTL UK, as we continue to provide our customers with the best possible global freight services at the most cost-effective prices. To learn more about how we can assist with your own import and export requirements throughout 2024 and beyond, please feel free to contact our professional and friendly team today.