The Weekly Roar

In this week’s Roar: disruption in the Red Sea, emergency surcharges, peak air cargo, good news from LA, and rail as one answer for emissions.

Things are getting even tougher on the sea, the Red Sea in particular. Houthi attacks are disrupting cargo shipping and causing billions of dollars in cargo to be diverted. Longer, more costly routes create a potential problem for consumers — delays and price increases. In hopes of protecting shipping lanes, an international task force has been formed to address the issue. Unfortunately, there’s no clear resolution in sight, and no idea how long the disruptions will last. All of this is on top of an already bad situation at the Panama Canal.

As capacity disappears, carriers have begun to implement emergency peak season surcharges (PSSs). With the dual issues of the drought at the Panama Canal and drone strikes on ships in the Red Sea, carriers are in some cases rerouting vessels around the Cape of Good Hope, adding an extra 10 to 12 days to voyage times — and a lot more fuel. Cost-wise, Asia-North Europe shippers will likely be impacted more than others, but disruptions are expected to cause delays throughout global supply chains.

In air cargo, the peak season seems to have reached its peak, but there are some mixed trends. Hong Kong saw an increase of 1% in outbound freight, which is up 9% year-over-year, especially to North America. In contrast, Rates in the U.S. were generally firmer, reducing the year-over-year drop. Overall, despite some hubs showing continued peak season strength, others indicate a potentially early or soft season.

There’s some good news out of the Port of Los Angeles. The Port saw a 19% increase in cargo volumes last month YoY, which is the highest increase of 2023. For the most part, the increase is attributed to strong Black Friday and Cyber Monday sales, as well as continued holiday shopping growth. Loaded imports and exports saw the biggest increases, reflecting strong consumer demand.

Could rail be the answer to emissions reductions when it comes to multi-modal transportation? Intermodal plays a huge role in global emissions, with trucks being a significant factor. However, trains carry cargo over long distances, using significantly less fuel per ton-mile compared to trucks. And with electric locomotives becoming increasingly viable, there’s a hint of a promise of near-zero emissions on electrified tracks in the future. Which, of course, means a complete infrastructure overhaul — a significant challenge to overcome.

For the rest of the week’s top shipping news, check out the article highlights below.