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Red Sea diversions lead to a 30% spike in ship freight rates

Red Sea diversions lead to a 30% spike in ship freight rates

Posted on May 24, 2024   |  

Red Sea diversions have led to a 30% surge in container freight rates, impacting importers preparing for the summer season.

Approximately nine out of ten large container ships are rerouting from the Red Sea due to ongoing attacks by Iran-backed Houthi rebels.

This redirection affects the Suez Canal, typically handling 15% of global shipping traffic and 30% of global container trade.

Many vessels are opting for the longer route around the Cape of Good Hope in South Africa, resulting in extended travel times.

Freight rates from China to California, which peaked at $20,000 per container during the pandemic, now stand at $4,500, marking a significant increase.

US ports saw a 10% uptick in container volumes in April compared to last year, indicating a robust import trend for the third quarter.

Shipping lines such as Maersk and Hapag-Lloyd have adjusted their yearly outlooks upward due to increased capacity demands resulting from the diversions.



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