White House Weighs-In on Red Sea Shipping Risks

The continued attacks on container ships passing through the Red Sea by Houthi rebels is now impacting all global trade lanes.  On January 3, 2024, the White House hosted a briefing on the attacks and warned that the higher shipping costs could effect the U.S. economy amid the diversion of ships from the Red Sea around the Cape of Good Hope. The U.S. is leading a 13 country coalition called “Operation Prosperity Guardian” aimed at protecting vessels transiting the Red Sea.

Approximately 15% of all global trade passes through the Red Sea. The diversions are impacting costs as Asia to Europe trade lanes have doubled in price already.  Asia to U.S. trade lanes have seen a 30% increase in pricing just within the last week. Northern Europe to U.S. trade lanes are now seeing an increase in pricing too. Air freight rates have also started to increase with an increase in volumes as a result of the crisis and in advance of the Lunar New Year. West Coast ports are seeing an increase in business as companies are diverting cargo bound to the U.S. East Coast through U.S. West Coast ports and choosing to utilize rail or transload and truck to East Coast destinations. Noatum Logistics has West Coast warehouses and is positioned to execute the transload options for our clients.

The Red Sea region is being hit particularly hard as vessels are having to find alternative ports to discharge cargo being routed within the region. Noatum Logistics is uniquely positioned to support these vessels and routings due to our Noatum Terminals divisions. In a recent blog post, Tackling the Red Sea Crisis, Noatum Logistics provides a list of ways we can assist within the region.

The longer transit time for vessels diverting to avoid the region will result in delays and generally impact all shipping schedules globally. Carriers have started introducing new vessels and we are expecting adjusted schedules, blank sailings, the introduction of premium services, and some issues with container repositioning.

If you have any questions, please contact your local Noatum Logistics representative.