📊 Ocean shipping rates jump more than 50% due to Red Sea attacks

Irbis Index November 2023

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News

Red Sea attacks: Ocean shipping rates jump more than 50% in key lanes The Red Sea crisis, involving attacks on commercial vessels, is expected to keep ocean freight rates high through at least February, as reported by Linerlytica.

• Attacks have led to increased operational costs for carriers due to rerouting, resulting in a spike in shipping rates in certain lanes.

• As of January 3, rates from Asia to Northern Europe surged by 151% week-over-week to over $4,000 per forty-foot equivalent unit (FEU).

• Rates from Asia to the U.S. West Coast also rose by 63% to $2,713 per FEU, possibly reflecting a shift to avoid East Coast transit times.

• Carriers have announced surcharges ranging from $500 to $2,700 per container for all Asia to North America shipments starting mid-January.

• The rerouting of vessels, often via the Cape of Good Hope, has led to longer transit times and a 52% rate increase from Asia to the U.S. East Coast, reaching $3,900 per FEU by January 3.

• Rates from Asia to the Mediterranean have more than doubled since January 2019, with CMA CGM indicating a rise to over $6,000/FEU starting January 15.

• Despite the disruptions, carriers reportedly have the capacity to manage the situation, which may help control further rate spikes. (link)

Descartes releases January Global Shipping report Descartes Systems Group released its January Global Shipping Report, which is the twenty-ninth installment since August 2021.

• The report indicates a 0.4% increase in U.S. container import volume for December 2023 compared to November 2023.

• There were contrasting trends at different U.S. ports: increases at East and Gulf Coast ports, but decreases at West Coast ports.

• Despite the Panama drought and Middle East shipping attacks in December, U.S. container import volumes were not significantly impacted.

• Port delay times increased, particularly at Gulf Coast ports.

• The report suggests that container import volume is consistent with seasonal patterns but indicates signs of global supply chain challenges.

• Descartes is a global leader in providing on-demand, software-as-a-service solutions to improve logistics-intensive businesses' productivity, security, and sustainability.

• The report is part of Descartes' ongoing analysis and strategy recommendations for addressing the global shipping crisis. (link)

Digitizing mid- and last-mile logistics handovers to reduce waste A recent McKinsey report discusses the significant waste that occurs in logistics chains, particularly at "blind handoffs" where goods are transferred between parties such as manufacturers, warehouses, retail stores, and consumers. These points are prone to costly miscommunication, loss of information, and delays.

• McKinsey's analysis suggests that between 13 and 19 percent of logistics costs could stem from these inefficient interactions, amounting to up to $95 billion in losses a year in the United States economy alone.

• The article reviews three emerging solutions and draws on best practices that can be applied, specifically in middle- and last-mile logistics. These include:

  • Real-time transportation visibility platforms

  • AI-based workflow automation

  • Generative AI-driven contextual communication

• The research behind the article is specific to the United States, but the themes it uncovers are applicable to logistics globally. (link)

Multinationals pledge major facility investment in India's Tamil Nadu The state government of Tamil Nadu in India has signed investment agreements worth over $4.39 billion with multinational companies such as Apple and Hyundai, as these companies continue to diversify their global supply chains.

• Tamil Nadu is the third-largest contributor to India's GDP and is expected to move up to second place by next year following these recent developments.

• The state is also the third-largest exporter in India and is home to Chennai Port, the country's second biggest container port.

• The investment deals include an agreement with JSW Energy to invest $1.4 billion in renewable energy projects, Tata Electronics to invest $1.5 billion for mobile phone assembly operations, and Nike shoemaker Hong Fu to invest nearly $125 million.

• Hyundai Motors, which has a long-established presence in the Chennai region, will invest $743 million, partly for electric vehicle battery and car manufacturing.

• Pegatron, a supplier for Apple from Taiwan, will invest $120 million to expand production.

• Apple is reportedly counting on India to be the next big driver of its growth as it looks to diversify some production away from China.

• Following these deals, a memorandum of understanding (MoU) was signed between the Tamil Nadu government and Maersk Line to explore opportunities to invest in land development to create logistics hubs.

• A Maersk spokesperson stated that many global manufacturers are looking to diversify their sourcing locations to reduce their reliance on a single source, providing an opportunity for several countries, including India. (link)

Tech

Logiwa Unveils The Next Generation in AI-driven Fulfillment Management Systems Logiwa Inc., a leading cloud-based Fulfillment Management System (FMS) provider, has announced the launch of its innovative product update, Logiwa IO.

• This advanced FMS is designed to redefine efficiency and effectiveness in high-volume fulfillment, adapting to the dynamic demands of the digital marketplace.

• Logiwa IO represents a pioneering shift in fulfillment management, transcending traditional Warehouse Management Systems (WMS) limits.

• The system is tailored for modern fulfillment challenges and stands as a testament to Logiwa’s mission, "Fulfill Brilliantly".

• The standout feature of Logiwa IO is its revolutionary architecture - headless, versionless, and serverless - setting a new benchmark in flexibility and customization.

• Logiwa is a leader in cloud-native AI-driven fulfillment technology, revolutionizing high-volume fulfillment for fulfillment networks, direct-to-consumer brands, and third-party logistics (3PLs). (link)

Other headlines 

VW Sees Promising Test Results for Potential Breakthrough EV Battery - Bloomberg

Kaushalya Logistics shares list at 33% premium over IPO price - Economic Times India

Tesla (TSLA) Recalls 1.6M Vehicles in China to Fix Autosteer - Yahoo Finance

China’s Cosco suspends Israel-bound ocean services - The Loadstar

Port of Virginia now runs on 100% clean electricity - DC Velocity