Red Sea Crisis Continues to Impact Global Logistics, Coffee Flow CoffeeNetwork (New York) - The Red Sea crisis has been going on for a month now, and the current service networks are clearly in flux, with a lot of uncertainty especially on the services going from Asia to Europe.
Sea Intelligence published a new report which analyzed Asia-Europe trade capacity to show just how severe the impact of the Red Sea crisis has been. Taking into account the timing of the Chinese New Year, which also results in capacity declines, the Red Sea crisis is the second largest event to impact trade from Asia to Europe, second only to when the Suez Canal was completely blocked by the ship, Ever Given. Interestingly enough, the COVID-19 pandemic did not affect Asia-Europe trade as much as the current situation in the Red Sea.
Other analysis from Sea Intelligence showed that, amidst the Red Sea crisis, global schedule reliability decreased by -5.0 percentage points M/M in December 2023 – the largest M/M drop since February 2021 – to 56.8%. With this, December 2023 schedule reliability was the second-lowest of 2023. On a Y/Y level, schedule reliability in December 2023 was only 0.4 percentage points higher than in December 2022. Due to the round-of-Africa sailings, the average delay for LATE vessel arrivals deteriorated, increasing by 0.30 days M/M to 5.35 days.
Costs have also been rising. Drewry’s World Container Index increased by 5% to $3,964 per 40ft container this week. This is 94% when compared with the same week last year.
The latest Drewry WCI composite index of $3,964 per 40ft container is the highest since October 2022 and is 179% more than average 2019 (pre-pandemic) rates of $1,420.
The average composite index for the year-to-date is $3,371 per 40ft container, which is $690 higher than the 10-year average rate of $2,681 (which was inflated by the exceptional 2020-22 Covid period).
Freight rates on Shanghai to Los Angeles increased by 13% or $484 to $4,344 per 40ft container. Followed by rates on Shanghai to New York which surged by 9% or $499 to $6,143 per 40ft box. Likewise, rates on Rotterdam to Shanghai and Rotterdam to New York swelled by 5% to $1,028 and $1,576 per feu respectively. Similarly rates on Shanghai to Rotterdam, Shanghai to Genoa and New York to Rotterdam inched up by 1% to $4,984, $6,365 and $615 per 40ft box respectively. While rates on Los Angeles to Shanghai remained stable. Drewry expects spot rates to plateau or decline in the next few weeks on the routes from Asia.
In their December coffee report, the International Coffee Organization (ICO) noted that “the rise in tensions in the Red Sea has prompted some shipping lines to re-route their coffee-carrying vessels. Thus, for South-East Asian and East African coffee en route to Europe, unintended consequences include a rise in freight costs as some shipping companies have introduced surcharges to account for the now-extended transit times.”
Brazil’s Coffee Exporters Association, CeCafe, says that the world’s number one coffee producer continues to face logistical bottlenecks, which impact performance and estimates that coffee exports could have been up to 2 million bags more.
Last year, coffee shipments were delayed in all 12 months. According to the Detention Zero (DTZ) report compiled by ElloX Digital in partnership with Cecafé. In December alone, 76% of vessel calls at the Port of Santos (SP) were recorded as detained, the second highest rate in 2023 after the 81% recorded in November.
The report also shows that, last month, only 15% of shipping procedures had a gate opening time of more than four days. Another 52% had between three and four days and 32% had less than two days.
Alexis Rubinstein
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