Shipping line Maersk is raising concerns about noticing “signs of further port congestion” due to the ongoing Red Sea crisis. Asia and the Middle East will be particularly affected, and a further increase in container freight rates is expected.
Maersk’s CEO Vincent Clerc says that in the past month, the container transport market has entered a new phase driven by disruptions from the ongoing crisis in the Red Sea and its ripple effects on global supply chains.
“While demand for container transport remains strong, supply has been negatively impacted by missed sailings, longer routes, equipment shortages, and delays leading to increased congestion across several key ports in Asia and the Middle East. This demand and supply imbalance has had an immediate and profound impact on freight rates,” says Clerc.
Growing supply chain bottlenecks
The Red Sea crisis has caused havoc in the logistics and shipping industry since October. Shipping lines have been forced to think out of the box, reroute shipments and consider alternative logistics maneuvers to keep cargo moving and get shipments to customers in good time.
Clerc says after a stable first quarter of 2024, price increases picked up during April and May across many regions. “The ongoing threats to commercial vessels in the Red Sea and growing supply chain bottlenecks indicate that this situation won’t improve soon. More capacity than expected will be needed to resolve these issues and stabilize the global supply chain,” says Clerc.
How does the Red Sea fit into the bigger picture? The Red Sea is a crucial corridor connecting the Mediterranean Sea, the Indian Ocean, and beyond. Its strategic location gives shippers access to Europe, Asia, and Africa. The Red Sea route is the natural sailing passage between these regions.
The maritime “nightmare” has even caused some ports to switch tactics. Last month, the Port of Salalah in Oman devised a solution. It introduced a multi-modal service option as an alternative to re-routing around the Cape of Good Hope.
Congestion at Asian ports
LINERLYTICA was founded in 2020 to provide data-driven market intelligence for the container shipping industry. In its latest report, container port congestion at key Asian ports continues to worsen. “Waiting times have also risen across all main Chinese port regions, with Shanghai and Qingdao experiencing the longest delays,” reads the report.
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About the author
Sharl is a qualified journalist. He has over 10 years’ experience in the media industry, including positions as an editor of a magazine and Business Editor of a daily newspaper. Sharl also has experience in logistics specifically operations, where he worked with global food aid organisations distributing food into Africa. Sharl enjoys writing business stories and human interest pieces.
