![]() Global demand for goods rose at an “unprecedented” speed in 2021, he said, but it has since fallen back to historically normal levels, while higher interest rates have lowered consumers’ appetite for big-ticket items usually paid for on credit. “We’re in a far better place than we were in the pandemic,” Simon MacAdam, deputy chief global economist at Capital Economics, told CNN. Global container shipping costs are less than half their level during the coronavirus pandemic, which peaked at $10,380 in September 2021.Īt that time, consumers were still mostly stuck at home, flush with savings and had little else to do but spend on goods. However, the current crisis pales in comparison with the one that preceded it. Global shipping costs per a typical 40-foot container stood at $3,786 this week, up 90% from the same time a year ago, according to the Drewry World Container Index.įor the same-sized container traveling from Shanghai in China to Rotterdam in the Netherlands, the cost has jumped 158% compared with a year ago to hit $4,426. Sand at Xeneta estimates that it costs carriers - companies like Maersk and Hapag-Lloyd - an extra $1 million per vessel to make a round trip around the southern tip of Africa, with the vast majority of that figure accounted for by higher fuel costs.Ĭarriers have consequently hiked the freight rates paid by companies to have their goods transported on their vessels and have also tacked on emergency surcharges. “That is 10 to 20 times more expensive.”ĭata from Xeneta shows an uptick in the volume of cargo flying from Vietnam, a manufacturing hub for clothing, to northern Europe over the past three weeks.Īdding another few thousand miles to shipping routes has increased fuel and insurance costs, as well as charter fees and wage bills. “We do see fashion companies and those selling apparel in Europe deciding that some of their clothing lines will go airborne, instead of going seaborne, and that’s when you really talk about escalating costs,” he said. There is some evidence that shipping customers are choosing to fly their goods rather than export them by sea, because of the disruption, according to Sand. That’s added as much as two weeks to a typical East-to-West journey for container ships, and 18 days for slower bulk carriers and tankers. ![]() ![]() Peter Sand, chief analyst at Xeneta, an ocean and air freight data firm, estimates that about 90% of the usual container ship capacity passing through the Red Sea and Suez Canal has been rerouted around the southern tip of Africa.Īround one-quarter of all bulk carriers, which transport vast quantities of dry cargo such as grain or cement, and a quarter of tankers, carrying oil or natural gas, have made the same diversion around South Africa’s Cape of Good Hope, he said. “So I think this is going to be with us for quite a few months.” “We are not near a resolution or a situation where we can see that the international community is able to provide a safe passage,” Maersk CEO Vincent Clerc told CNN’s Julia Chatterley in an interview Thursday. ![]() Still, the current crisis has left its mark, prompting Tesla ( TSLA) to pause some of its production because of delays in the delivery of car parts to Germany, and Swedish furniture giant Ikea to warn of possible product shortages. That exodus is a big deal: The Suez Canal, which connects the Red Sea to the Mediterranean Sea, accounts for 10-15% of world trade, which includes oil exports, and for 30% of global container shipping volumes.īut the overall impact on shipping costs and supply chains is far less severe than at the height of the pandemic, analysts tell CNN. Those ships, which ferry everything from trainers to mobile phones from manufacturers in Asia to customers in Europe, have been taking longer routes to avoid the area. There has been an “almost wholesale exodus” of larger container ships from the Red Sea and the adjoining Suez Canal, Richard Meade, editor-in-chief of shipping publication Lloyds List, told CNN. The resulting delays and extra costs for shipping companies have fueled concerns that consumers, still struggling after a prolonged spell of rampant inflation, could be hit with fresh price rises. Related article The Red Sea crisis tests China’s global ambitions Cargo ships wait in the Red Sea near the opening of the Suez Canal, on March 29, 2021.
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