The blockade of the Red Sea has caused serious headaches for the freight forwarding companies. Container rates are going through the roof, and many companies chose to switch transport modalities or divert their routes and circumnavigate Africa rather than risking passing through the Suez Canal. Rogier Vervoort, owner and managing director of Dutch Container Merchants (DCM), shared some insights on the issue with RailFreight.com.
Vervoort pointed out that shipping lines promptly increased their rates for the trade route between Europe and China as soon as the Houthi attacks started. “Prices have increased from roughly US$ 1.700,00 in early December to almost US$ 4.500,00 per 40-foot-high cube container in the latter half of January”, he specified.
However, according to Vervoort, the industry is not very pleased with the approach taken by shipping lines when increasing their rates. “A few cargo owners even found it very unfair that shipping lines took advantage of this situation. Some mentioned that the high price increases were close to theft in broad day light”, he said.
‘Hard to predict when instability will end’
Vervoort also pointed out that it is quite hard to predict if, when and to what extent these rates will decrease. Recent increases in military presence, especially from so-called Western countries make it look like the situation will remain fragile for a while in the Gulf of Aden and the Red Sea area, he explained. “It is believed that only a cease-fire in the Gaza region could bring some stabilization into this area”, he added. Rail and air freight were the preferred alternatives for forwarding companies in this situation, with both sectors seeing a rise in requests. “It is however unpredictable if this will continue in March and also in the 2nd quarter”, Vervoort concluded.
