The Red Sea shipping crisis caused by the Houthis has caused global freight rates to soar for nearly a month, and the German "Handelsblatt" said on the 8th that in just about 4 weeks, the astonishingly high Eurasian sea freight rates have pushed the global average freight rate by 60%. Now that most container shipping companies choose to detour Africa, capacity is starting to become scarce. Logistics experts warn that freight bottlenecks in places like Europe could be seen in the coming weeks. The Global Times confirmed that in response to the crisis, shipping giants such as Hapag-Lloyd began to charter Chinese ships to carry out Red Sea route transportation.
German shipping giant Hapag-Lloyd recently chartered a Chinese ship to operate the Red Sea route. The picture shows the Hapag-Lloyd container ship at the port. (Visual China).
Europe and the United States are worried about the logistics crisis.
According to project44, a U.S. logistics service provider, there may be a shortage of available items in parts of the world in the coming weeks. The company's **chain analyst reports: "Retailers are planning their inventory without taking into account additional lead times due to unforeseen events. "After the peak holiday demand, there is a risk that the inventory will run out. This may become apparent from February.
The New York Times said on the 8th that so far, the problems in the Red Sea have not seriously disrupted the global ** chain like the epidemic. "But things are moving in that direction. Fudge Orn, director of the British Institute of Export and International Studies, said. The question will be key for the container shipping industry to cope with the annual export surge, which usually occurs weeks before Chinese factories shut down during the Chinese New Year in February.
Geertz, a department manager of a company engaged in Central Europe in Hamburg, Germany, told a special reporter of the Global Times on the 10th that they had increased their orders before the Chinese Lunar New Year. But the other day the shipping company informed them that due to the crisis in the Red Sea shipping lanes, the ship detoured to Africa and had to increase the cost. Their biggest fear now is that the delay in arrival will leave merchants' shelves empty. This could mean another surge in inflation in Europe. Now they are considering other alternatives, including China-Europe freight trains and air freight.
Ava, a white-collar worker at a bank in Frankfurt, Germany, told reporters on the 10th that in previous years, January was the discount season for major e-commerce platforms and retailers in Germany, but there was no major movement this year, and some items have even appeared and sold out. She worries that the crisis in the Red Sea shipping lanes will further exacerbate the already high inflation caused by the Russia-Ukraine conflict and the Palestinian-Israeli conflict.
The German shipping giant chartered a Chinese ship.
Nils Haupt, press officer of the German shipping giant Hapag-Lloyd Group, said in an interview with a special reporter of the Global Times on the 9th that the current Red Sea crisis has a huge impact on Hapag-Lloyd. Since December 18 last year, the company's ships sailing by sea between Europe and China have been detouring to the Cape of Good Hope, waiting for the crisis to be resolved.
In response to reports that Hapag-Lloyd has chartered a 3,400 TEU class Chinese container ship for its second route to the Mediterranean, he said the news is true due to the "need for additional capacity". He did not say whether the chartering of a Chinese container ship was related to safety.
Similar measures are reportedly being taken by Conular Shipping in Singapore. Tradewinds, the global shipping industry, said the company is chartering a ship from Singapore Shunfeng Shipping Hong Kong for around $18,500 per day. While most of the big carriers have chosen to avoid the Red Sea after the Houthi attack, some smaller shipping companies are willing to serve the region and are looking for vessels for additional capacity, ocean brokers said. According to shipbroker Clarkson, if the Red Sea crisis lasts long enough, charter demand could be boosted further as the company needs additional capacity to maintain the previous sailing frequency.
Xu Kai, chief information officer of the Shanghai International Shipping Research Center, told the Global Times on the 10th that Hapag-Lloyd and other companies chartered Chinese ships, indicating that Chinese ships that were not targeted by the Houthis have harvested market demand. In the context of the general increase in Eurasian sea freight, the service provided by Chinese shipowners is fast and good, so they can win the market. This is an opportunity for Chinese shipping companies to gain more market share and expand their business on the Asia-Europe route.
Xu Kai further analyzed that after the crisis, more overseas shipowners may choose to register their ships in China, and they can explore the launch of "second flag" services to enhance China's influence as an important flag country. "With the current situation of offshore chartering of Chinese ships, we can lead the model contract in the relevant charterparty and enhance China's voice in the industry. Xu Kai also said that in the case of European and American insurance companies are reluctant to undertake the "risk business" of the Red Sea, Chinese insurance companies can try to cooperate with enterprises from the Red Sea coastal countries to launch the insurance business of the Red Sea route, so as to enhance the influence of Chinese enterprises in the international shipping insurance sector.
This year, shipping faces many unforeseen risks.
Reuters said on June 6 that the Red Sea is not the only problem facing seafarers in 2024. Factors such as the ongoing crisis in the Red Sea lanes and regional conflicts and tensions will impact the global shipping industry this year. For tankers and other commodity carriers, year-round vessel schedules can be disrupted by factors such as war, drought and political tensions.
90% of the world's ** transportation is completed by sea, and the "butterfly effect" of shipping risks makes the global commodity market very sensitive to the turbulence of the shipping industry. Severe weather events are becoming more frequent than the impact of political tensions. Dry bulk transportation costs for commodities such as wheat, soybeans, iron ore, coal and fertilizers have risen since the end of 2023 as drought-induced water levels have weakened the Panama Canal's capacity, project44 said. Brazil suffered a double whammy, with the Amazon suffering a historic drought and excessive rainfall in the north of the country, causing longer than usual queues for ships at the port of Paranagua at the end of 2023, triggering volatility in the soybean market.
Yan Zhanyu, a scholar at the School of International Relations of the University of International Economics, told the Global Times on the 10th that the smooth operation of shipping in key waters is a public good that requires neighboring countries or world powers to provide guarantees. Chinese shipping companies should not only position themselves for commercial gain, but also try to strengthen their internal security or defense capacity building to deal with the increasingly complex and changing risk situation of international waterways, and at the same time strengthen the situation assessment of key waterways in normal times. In addition, enterprises should also reflect information to the first in a timely manner and work together to solve problems.
Global Times special correspondent in Germany and Singapore, Ren Zhong, Global Times reporter Chen Zishuai.