The global supply chain is facing disruptions due to Iran-backed Houthi rebels attacking vessels in the Red Sea. As a result, freight prices are expected to increase, and longer transit times around Africa are causing delays in product deliveries. Vessels are being rerouted, impacting the supply of various goods, including spring clothing, electronics, and furniture. Retailers are implementing mitigation strategies, such as moving up shipment orders and diverting shipments to the West Coast. The longer voyages are contributing to higher freight costs, prompting ocean carriers to consider rate increases. The Suez Canal route suspension and Panama Canal restrictions are further complicating the situation. The largest ocean carrier, MSC, has announced significant rate increases starting January, and other carriers are expected to follow suit. The Federal Maritime Commission has waived the 30-day notice requirement for surcharges or rate increases in shipments rerouted around South Africa’s Cape of Good Hope. The Red Sea situation has led to the rerouting of 419 vessels, affecting container capacity valued at $282.5 billion. Vessel volume in the Suez Canal has declined, causing significant losses for Egypt. The recent large-scale attack by the Houthis is fueling expectations of a more stabilized diversion route around the Horn of Africa. Logistics companies are warning of container shortages, reminiscent of challenges faced during the COVID pandemic, as containers need to be relocated due to shipping delays. The situation is described as extremely fluid and volatile, with daily changes in vessel routes. The outbound leg from Asia to Europe is seen as the beginning of potentially turbulent times in 2024 for the supply chain.

Inspired by: https://www.cnbc.com/2024/01/10/global-shipping-rates-set-to-surge-as-carriers-avoid-red-sea.html