Container rates hit $10,000 as ocean freight inflation soars 40% in Red Sea crisis

With the Red Sea diversions by shipping companies including Maersk continuing amid the risk of attacks by the Houthis, global logistics managers are faced with a two-front storm of rising ocean and air freight prices and stranded cargo. Both are threats to the global supply chain after three tumultuous years of inflationary pressures and delays from Covid disruptions which recently seemed to finally have been vanquished.

Options for ‘stranded’ cargo
Logistics CEOs tell CNBC they are presently sorting out this cargo, and for the cargo considered “stranded” in Europe or the Middle East, they are looking to move select products by air as a possible solution. U.S. shippers are also assessing alternative trade routes like the TransPacific to the West Coast, and even the Panama Canal, to access Gulf and East Coast ports, with decisions coming down to analysis of transit time and freight costs.

Air freight price spikes
U.S. shippers have several ocean route options, but European shippers do not. Europe heavily depends on the Suez. The re-routing for Europe has a longer transit time than the United States and as a result, European shippers are looking to the air to move their products.