The Weekly Roar

In this week’s Roar: Differing views on the Red Sea crisis, an air freight update, tackling emissions in the freight industry, and the delay of the CSRD.

That there is a crisis in the Red Sea is indisputable, but the impact on supply chains may be more of a matter of opinion. It’s true that Houthi attacks on container shipping are happening and ships are being diverted around the Cape of Good Hope, increasing shipping times and costs. As far as opinions go, Drewry, a respected shipping consultancy, feels that the overall impact will be limited, thanks to the current levels of supply of shipping capacity. They also feel that the timing of the attacks — which coincided with a period of high demand before the Chinese New Year — played a major role in the initial disruption.

Contrasting the perspective of Drewry, others have a completely different opinion on the problems in the Red Sea. Recently, shippers, retailers, and trade experts offered grim warnings to Congress. They feel that the economic impact of Houthi attacks on shipping in the Red Sea will be significant. And, they will cause increased shipping delays and freight prices, ultimately leading to another bout of inflation. Supply chains have already been disrupted to the point that some companies are using air freight, which is much more expensive.

Air freight is experiencing a slight tail-wind (or headwind depending on your perspective) from the Red Sea crisis with rates increasing in January due to that and the Lunar New Year. However, overall, rates were down in comparison to last year, but they’re still higher than pre-COVID levels. The IATA expects that rates will avoid any large increases in 2024.

The world’s largest freight companies are challenged when it comes to meeting their climate goals. Combined, FedEx, UPS, and DHL were responsible for 92 million tons of emissions in 2022, which is more than what some countries produce. And this is expected to get worse as the demand for last-mile deliveries is predicted to increase by 78% by 2030. And despite investments in electric vehicles, there are still challenges when it comes to scaling up.

There is some criticism about the EU’s plan to delay the Corporate Sustainability Reporting Directive (CSRD). The CSRD requires companies to report on their sustainability efforts, including emissions. European Parliament wants to delay the adoption of the new reporting standards until 2026, and critics argue that this will slow down progress on climate change. And of course, the sectors that are the biggest polluters are those that have been recommended for the delay. Critics also feel that the delay could have negative consequences on the sustainability efforts of other countries.

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