Industry: The impact of maritime transport issues on consumers has yet to be seen

Source: 5688.cn

Unfortunately, the challenges facing the trading world have become white noise. Seafarers have been taken hostage, some have died in attacks on ships, others have sunk to the bottom of the sea. However, threats to freedom of navigation and the aftermath of these Red Sea attacks have become part of the gloomy background noise in the world news. The average consumer doesn't know what's going on unless they read the trade news. As the Red Sea diversions, waves of uncertainty and clogged hairballs are increasing. Egypt continues to lose millions of dollars and is Mired in high inflation. What is happening now could exacerbate geopolitical instability and ultimately affect people's wallets.

Figures released earlier this week showed that Suez Canal's revenue fell 64.3 percent to about $337.8 million in May. In May 2023, it recorded $648 million. The number of ships passing through the Panama Canal also fell to 1,111 in May, down from 2,396 a year earlier. Shipments through the Suez Canal fell 68.5 per cent last month to about 44.9m tonnes. In May 2023, the gross cargo tonnage was 142.9 million tons. Egypt is a key ally in Middle East peace. You might think that the economic fallout from this event would be a much bigger story. This is not the case.

People will only be surprised six to nine months from now when temporary inflation hits consumers, or we see container prices go up by $20,000.

Unlike during the pandemic, when consumers around the world are testing their credit cards with record spending, this freight-crazy dynamic is being driven by increased mileage and the resulting delays in arrival and container turnover. Due to traffic congestion caused by the diversion of the Red Sea, companies such as Freightos have called the increase in ocean freight rates "climbing Mount Everest." DHL warned in its latest Red Sea alert that a growing shortage of containers in Asian export hubs has led to a "container price bubble."

Ocean freight rates will continue to rise. Shipping companies that avoided the Red Sea attack won't be returning via the Suez Canal anytime soon. Houthi attacks on freedom of navigation have not stopped. DHL told CNBC that sea freight inflation may not ease until the Chinese New Year in early 2025, with some predicting sea freight prices will reach the coronavirus era peak of $20,000 to $30,000.

According to CNBC's recent supply chain hot spot map using SONAR and Xeneta data, shipping orders are falling while prices continue to soar. Fundamentals have been thrown out the window. A recent HLS report to clients confirms the data: "We are seeing a slowdown in bookings in some categories; For low-value goods such as furniture, crafts and toys, shippers like to hold reservations until the market calms down. But for other categories that could be affected by the new tariffs, such as high-tech products and auto parts, especially car batteries and tires, demand has continued."

The latest report from Sea-Intelligence reiterates CNBC's findings on ocean freight rates. Alan Murphy, chief executive of Sea-Intelligence, crunched the numbers to see if it was in the best interest of shipping companies to raise rates less aggressively when the market was rising. Will they be able to retain more customers once the market turns down?

Their research says no.

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