June 2024
Red Sea – June Update
The ongoing crisis in the Red Sea continues to impact global shipping. Continued issues as a result of rerouting and rising costs have indicated that shipping times will continue to be affected. Here’s an update on the current situation and the potential impact on shipments.
The Impact on Procurement
Major European ports are experiencing severe congestion as they struggle to handle the increased volume of goods rerouted from the Red Sea. This has resulted in longer waiting times and further delays in the supply chain. Service reliability is decreased, and the disruptions are expected to continue for the foreseeable future.
The strong market demand combined with lower vessel capacity has led to a shortage of shipping equipment. This is particularly evident in North China, where equipment availability varies daily based on vessel arrivals and the discharge of empty containers.
In response to the crisis, carriers have implemented several measures, including increased transshipments in Asia and realigning capacity from other major trades. However, these measures have led to unintended consequences: Singapore, the world’s second busiest port, reached high congestion levels at the end of May, with container ships waiting up to seven days to berth. Emergency measures have been put in place to alleviate congestion.
PWS’ Commitment to Reduce the Impact on Customers
To mitigate the impact on our customers, we have planned ahead, with the majority of 2024 stocks already landed. This ensures our immediate supply chain remains unaffected.
PWS are committed to supporting our customers throughout this period. Your dedicated account support team are on hand to discuss any queries you have during this time. We will continue to monitor the situation and communicate updates across our platforms.
January 2024
Red Sea Attacks: What’s Happening?
Due to the current attacks on ships crossing the Red Sea, ships have been forced to divert from the Suez Canal to the Cape of Good Hope route to avoid being targeted. Due to apparent indiscriminate targeting of vessels, the Bab Al-Mandab straight has been deemed unsafe to pass.
What Impact is this Having on Procurement?
This has caused disruption to containerships, affecting up to 29.3% of the global fleet. Overall transit times could be increased by up to 30% with the diversion to the Cape route, with higher impact if vessel speeds are not increased to minimise delays. Transit times could be delayed by 7-14 days, with capacity reduced by up to 20%. Alongside the Chinese New Year rush, this lesser capacity combined with increased fuel consumption will likely lead to increased freight rates. Air freight costs are also rising due to the increase in demand to move away from sea freight.
Measures are being put in place to minimise supply chain disruption, such as increased vessel speeds to account for increased travel distance. Additionally, the Panama Canal increasing its daily transits to 24 from 20 from the 16th of January onwards to account for reduced capacity on alternate routes.
What are PWS doing to Reduce the Impact on Customers?
PWS are aware of the potential implications the above may have on our supply chain and stock levels and we are planning ahead to avoid any disruptions. We will ensure to keep monitoring developments and inform our customers of any complications that may arise and how we will minimise the impact as far as possible.
If you have any questions or concerns regarding the above, please don’t hesitate to get in touch.
This article will be updated as we receive additional information regarding potential disruption to service.
