The Situation in the Red Sea and Lunar New Year

Shipping lines are still avoiding the Red Sea and sailing around the Cape of Good Hope, sea freight rates will rise again in mid-January, equipment and space are in short supply, and the situation will be exacerbated by the Lunar New Year.

  • Red Sea
  • Sea Freight

The situation in the Red Sea remains very tense and could become even worse as a result of the recent attacks against the Houthis. All shipping companies are currently avoiding the Red Sea and freight traffic is being channelled exclusively via the Cape of Good Hope. The longer route means that ships and containers are unavailable for longer than would be the case if they were travelling through the Suez Canal. On the one hand, this results in capacity bottlenecks on the ships. On the other hand, equipment is slowly becoming scarce, meaning that some of the available space on the ships cannot be utilised. The bottom line is that sea freight rates have risen sharply.

The situation will be further exacerbated by the Lunar New Year on 10 February. Preparations for one of the most important festivals in Asia begin as early as mid-January, e.g. by shutting down production. During the Lunar New Year celebrations, almost all factories and manufacturers in China stop their processes, ports restrict their operations and labour is unavailable - disrupting the entire supply chain and logistics operations. The New Year is also celebrated in other countries and business comes to a standstill. In the run-up to the Lunar New Year, companies bring forward their shipping needs, leading to capacity bottlenecks. The demand for shipping, especially for exports, skyrockets. This usually leads to reduced availability of containers, transport delays and increased shipping costs. This year, the situation will be even more tense than usual.

It is already very difficult to organise departures at short notice, as capacities are fully booked well in advance. We therefore recommend that you consider other freight services and use air freight for time-critical shipments. Here, too, we are seeing an increase in rates due to the tense situation in the sea freight market. If you still have shipments in the next few weeks, we strongly recommend that you arrange this as soon as possible. It is still not possible to predict when the situation will normalise.

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