{"id":24282,"date":"2024-06-05T13:55:22","date_gmt":"2024-06-05T17:55:22","guid":{"rendered":"https:\/\/www.odysseylogistics.com\/?post_type=blog&p=24282"},"modified":"2025-03-05T21:23:31","modified_gmt":"2025-03-06T02:23:31","slug":"global-issues-squeeze-freight","status":"publish","type":"blog","link":"https:\/\/www.odysseylogistics.com\/blog\/global-issues-squeeze-freight\/","title":{"rendered":"Perfect storm: Global issues squeeze freight"},"content":{"rendered":"\t\t
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As we move further into 2024, it\u2019s clear that equipment availability, fuel costs and freight rates are all moving in time with the many different global issues that are impacting global supply chains. The Red Sea crisis, war in Ukraine, higher China tariffs and the uncertainty around the Iran nuclear deal are just some of the top geopolitical tensions that are affecting certain aspects of transportation.<\/span><\/p>

Collectively, these issues are impacting the state of freight right now and creating new challenges for shippers and consumers alike. For example,<\/span> CNBC<\/span><\/i><\/a> reports that the ocean container capacity crunch has hit global trade just as peak shipping season starts, with freight spot rates up some 30% over the past few weeks and heading higher.\u00a0<\/span><\/p>

\u201cA perfect storm in global trade is creating a shipping container capacity crunch, fueling a sudden and surprise spike in ocean freight rates,\u201d the news outlet says. \u201cThe beginning of peak shipping season, coupled with the longer transits to avoid the Red Sea, and bad weather in Asia, have hit the flow of trade on key routes. Ocean carriers are skipping ports or decreasing their time at port, and not picking up empty containers, in an effort to keep vessels on track for delivery.\u201d\u00a0<\/span><\/p>

Freight Rates Surge<\/b><\/p>

Surging freight rates started last December when terrorist attacks in the Red Sea forced the world\u2019s container ships to divert around Africa, reducing shipping capacity. This was because it takes 30-40 percent longer to complete the round trip from Asia to Europe, lowering the network\u2019s effective throughput, according to<\/span> Business Day<\/span><\/i><\/a>.\u00a0<\/span><\/p>

The Shanghai Containerized Freight Index (SCFI), which measures the container freight price in the spot market showed that Shanghai to Europe rates hit a 155 percent increase from April 15, and nearly three times increase from December 15, 2023, the publication reports.<\/span><\/p>

\u201cAlso, Asia to US trade lanes have been heavily impacted, with rates from Shanghai to the US West Coast adding \u2018a 37 percent increase from April 15, and a 142 percent increase from Dec 15, 2023.\u2019 The high cost of freight offsets capacity gaps caused by the Suez re-routings as carriers were forced to rotate many ships from the Pacific to Asia-Europe lanes,\u201d notes Amaka Anagor-Ewuzie in <\/span>Business Day<\/span><\/a>.<\/span><\/p>

Teetering at the Top of a Sharp Pyramid<\/b><\/p>

The container shipping market right now can at best be described as teetering at the top of a sharp pyramid. The ability to even roughly predict what freight rates will do over the next six months is getting more difficult. Some of this ambiguity can be blamed on these underlying market conditions:<\/span><\/p>