Source: Wall Street News
The diversion of merchant shipping caused by the Red Sea crisis is triggering a “butterfly effect” around the world. The average shortest transit time from Asia to the Mediterranean has increased by nearly 40%, leading to congestion at major Asian ports such as Singapore, and a drop in the punctuality rate of container ships. The chain effect is also affecting air freight prices.
The Red Sea crisis has stifled the “throat” of world trade and is triggering a “butterfly effect” around the world. The rare congestion at the port of Singapore is one of them.
Last week, data from shipping consulting firm Linerlytic showed that the backlog of containers at Singapore Port, the world's second-largest container port, reached an astonishing 450,000 TEUs, far exceeding several rounds of highs during the COVID-19 outbreak, and port berthing delays have been extended to 7 days.
At the same time, the “one box is hard to find” situation has reappeared, and global container shipping prices have ushered in a new round of increases since May. According to data from May 31, the Shanghai Export Container Freight Index (SCFI) Composite Index reported 3044.77 points, up 341.34 points from the previous week, or 12.63%. Freight rates for the 13 sub-routes fell slightly on Japan's Kanto Line; the remaining 12 routes all rose, and the Western US Line increased by nearly 20% in a single week.
Various factors, including extreme weather and a rebound in US demand, have caused the current situation, but the Red Sea crisis, which has continued for nearly half a year, is thought to be the root cause of this epic “big ship jam.”
Since the beginning of the year, Yemen's Houthis have repeatedly attacked targets related to the Red Sea. Britain and the US have carried out armed attacks against the Houthis in Yemen, and the conflict has gradually become protracted. Amidst the fire, international shipping giants are taking detours one after another, and the economic impact is spreading around the world.
According to estimates by maritime data and consulting firm Sea-Intelligence, the diversion increased the average shortest transit time from Asia to the Mediterranean by nearly 40% and the average shortest transit time to Northern Europe by 15%.
Disrupted shipping schedules have led to congestion at major Asian ports such as Shanghai, Ningbo, and Singapore. Due to its proximity to the Red Sea and an important hub for sea and air transportation, the UAE's Jebel Ali Port is also facing congestion.
The punctuality rate of container ships has declined. According to Sea-Intelligence, the proportion of container ships arriving on time has dropped to around 52%.
The knock-on effect has also affected air freight prices. According to WorldACD, a global air freight data provider, air freight rates from the Persian Gulf and South Asia to Europe rose nearly 80% in May compared to the same period last year, which is simply amazing compared to the average global freight rate of about 3% during the same period.
It is currently impossible to predict when the global supply chain system will return to balance. Rolf Habben Jansen, CEO of German container shipping giant Hapag-Lloyd, said that if the situation in the Red Sea does not improve, this situation may continue for several months.
editor/tolk