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Global shipping recession may ease as freight rates skyrocket amid Red Sea turmoil

Global shipping recession may ease as freight rates skyrocket amid Red Sea turmoil

Posted on January 22, 2024

Shipping companies are being pushed to change routes due to recent attacks by Yemen's Houthis in the Red Sea, causing freight rates to spike.

Ships taking longer detours around the Cape of Good Hope due to safety concerns increased ocean freight rates by up to $10,000 per 40-foot container.

To avoid Houthi attacks, container ships diverted over $200 billion worth of goods away from the Red Sea, impacting global shipping.

Major players in ocean shipping, like Maersk, Evergreen, and COSCO, manage cargo and transportation as Vessel-Operating Common Carriers (VOCCs).

Before the Red Sea attacks, the global shipping industry was struggling, experiencing a recession in 2022 with container rates more than halving.

Asia-Europe rates, averaging $1,550/FEU in 2023, have more than doubled to over $3,500/FEU due to the impact of the Red Sea disruptions on shipping routes.



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