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International Shipping Prices Continue To Rise

Global logistics managers are facing a twin storm of rising sea and air freight prices and stranded cargo as shipping lines including Maersk continue to bypass the Red Sea due to the risk of Houthi attacks. After three years of inflationary pressures and delays caused by the coronavirus pandemic, global supply chains that seemed to be just beginning to recover are now under threat again. As more ships circumnavigate the Red Sea, ocean freight price ceilings surge within hours, with truck rates now being quoted in the Middle East more than double what they were previously.

 

Since the Red Sea incident broke out, the number of inquiries about China-Europe freight trains has increased by 40%. For a long time, foreign trade companies have preferred shipping by sea due to cost reasons. However, due to the current situation in the Red Sea, freight rates on Asia-Europe routes have soared, and more companies are beginning to consider China-Europe freight train transportation. Light industrial products and e-commerce goods mostly choose China-Europe freight trains because they have higher requirements on timeliness and service. However, traditional bulk trade goods, such as large machinery, automobiles, etc., do not have high timeliness requirements and prefer low prices and large volumes.

 

According to statistics, Egypt's Suez Canal Authority raises tolls almost every year. For example, in January this year, tolls increased again. Among them, the fees for cruise ships and ships transporting dry cargo will increase by 10%, and the fees for other ships will increase by 15%.

 

Nearly 12% of global trade passes through this canal, making it one of the busiest rivers in the world. As the throat of global maritime shipping, the Suez Canal has also brought considerable economic benefits to Egypt. According to previous reports, the economic benefits brought by the Suez Canal account for approximately one-third of Egypt's total economy, with a specific amount of approximately US$100 billion. The economic impact of the obstruction of the waterway on the Suez Canal still needs to be further measured.

 

The previous Suez Canal blockage revealed the fragility of global trade and supply chains. According to estimates by authoritative media in the shipping industry, blockages cause losses of US$6 billion to US$10 billion every day, with an average loss of US$400 million per hour. Although the impact of this attack on a merchant ship is less than the above-mentioned incidents, if an accident occurs and key hubs of the global supply chain, such as the Suez Canal and Panama Canal, are closed or blocked, it will have an impact on global trade.


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