Many shipping lines increased freight rates due to tensions in the Red Sea

According to news from the Vietnam Association of Seafood Exporters and Processors (VASEP), a series of large shipping companies such as Yang Ming Line, One, Evergreen Line, HMM, Maersk... have sent notices that they will collect additional fees due to having to replace Change routes to Asia - Europe, avoid passing through the Suez Canal and the Red Sea area.

Starting from January, fares to the US/Canada and EU will increase significantly compared to December 2023. Specifically, the West Coast (LA) increased by 800-1,250 USD, depending on the route. Specifically, in December 2023, the fare will increase from 1,850 USD to 2,873-2,950 USD for January 2024.

The East Coast (NY) recorded a larger increase from 1,400 USD to 1,750 USD depending on the route. Specifically, in December 2023, the price was at 2,600 USD, increasing to 4,100-4,500 USD for January 2024.

Particularly, ship freight to the EU recorded a sharp increase compared to December 2023. Specifically, the fare to Hamburg cost 1,200-1,300 USD in December, increasing to 4,350 USD-4,450 USD in January, more than doubling.

The reason businesses say this is that 80% of goods going to the East Coast of the US/Canada and the EU go through the Suez Canal. Due to Israel/Hamas tensions, the Houthi rebel group (Yemen) attacked ships entering the Red Sea to pass through this canal.

Last December, ships of Maersk, MSC, and CMA were all attacked. This forces lines to go around the Cape of Good Hope (South Africa), a journey that takes an additional 7-10 days. This leads to a longer ship turnaround, incurring more transportation costs, a ship turnaround takes about 2 weeks.

Some shipping routes have had to cut some weekly shipments, leading to a lack of space or putting more ships into operation, increasing costs.

VASEP assesses that this could be a new challenge for seafood businesses in 2024. If tensions in the Red Sea region continue or escalate, it could lead to increased transportation costs and input product prices. Increased input for aquaculture and seafood processing affects the competitiveness and profits of seafood enterprises.

Source: dttc.sggp.org.vn