July 2024

The Red Sea region continues to face a significant crisis that severely affects global shipping routes and causes trickle-down issues throughout the logistics industry. Since November, the conflict caused by Yemen-based Houthis has disrupted the container shipping sector, leading to increased transit times and overall freight costs. The Suez Canal, one of the world's busiest shipping lanes, has seen an 80% drop in traffic from May 2023 to May 2024. This significant decrease has forced many carriers to find alternative routes that would provide safe transit for their client's goods.

Now, ships are navigating around Africa or opting for the Panama Canal (With the Panama Canal having its own volume issues at the moment), which adds an average of roughly 10-14 days to transit times. These delays are particularly severe for shipments from China to Europe, Southeast Asia to Europe, and Southeast Asia to the US East Coast. The financial implications are considerable—longer routes mean higher fuel costs and extended delivery times. This shift has strained shipping capacities, making it more challenging to meet demand, especially with the upcoming peak shipping season.

Furthermore, insurance companies that guarantee freight and the ships containing it have now begun to restrict coverage in these areas and or are charging a much higher premium for transit in the area. Despite initial schedule disruptions, carriers have now settled into new routes, reducing delays from initial highs to a more manageable 4-8 days. By staying informed and adapting strategies, shippers can navigate these challenges effectively and minimize disruptions to their operations. Our team is continuing to monitor the situation to bring our clients and partners the latest updates and news from the region.

At JF Moran, we are acutely aware of the ongoing challenges in the Red Sea region and their widespread effects on global shipping and logistics. The significant drop in Suez Canal traffic has led to extended transit times and increased costs as vessels are rerouted around Africa or through the Panama Canal. These delays, averaging 10-14 days, are putting pressure on shipping capacities and driving up fuel costs, especially for critical trade lanes between China, Southeast Asia, Europe, and the U.S. East Coast.

As insurance premiums rise and coverage becomes more restrictive in these high-risk areas, shippers are facing increased costs and logistical complexities. However, JF Moran is here to help you navigate this turbulent landscape. Our team closely monitors these developments to provide proactive solutions and alternative shipping routes that minimize delays and maintain cost-efficiency.

With peak shipping season approaching, it’s crucial to have a strategic logistics partner by your side. JF Moran offers the expertise and real-time insights you need to adapt to these evolving circumstances, ensuring your supply chain remains resilient and your operations run smoothly. Stay ahead of the disruptions with JF Moran—your trusted partner in global trade.