The war in the Red Sea has escalated, and cargo ships are under attack and not safe. We advise our partners to plan more carefully, anticipate rising rates, and expect possible additional surcharges on existing bookings.
Some happenings:
• CMA CGM has declared Force Majeure and is charging additional war risk fees. Date of application: December 20th, 2023 for cargo on board or to be loaded/discharged to/from Red Sea: $1,575 per 20′ Dry, $2,700 per 40′ Dry. The steamship line also reserves the right to apply additional costs per Clause 10 of their BL and tariff.
• Maersk has also announced a slew of additional charges. What they are currently billing is $400 extra per 40′ container. The steamship line also reserves the right to apply additional costs per Clause 20 of their BL and tariff.
• What is Force Majeure? It describes the provision in a contract that frees the provider from obligation if an extraordinary event directly prevents them from performing. Events include natural disasters (fire, storms, floods), governmental or societal actions (war, invasion, civil unrest, labor strikes), and infrastructure failures (transportation, energy)
• Shortage of Vessel Space: Here, the customer market reacts quickly. We see increased booking actions, and everyone wants to secure shipments before price hikes: a sort of market panic.
• Longer Transit Times: cause by attacks against foreign-owned vessels transporting goods through the strait of Bab al-Mandab (a 20-mile wide channel that splits Eritrea and Djibouti on the African side and Yemen on the Arabian Peninsula). Ships usually take this route from the south to reach Egypt’s Suez Canal further north. But because of the attacks and the threat of future assaults, several of the world’s largest shipping firms, including Mediterranean Shipping Company and Maersk, have diverted vessels away to a much longer route around Africa’s Cape of Good Hope and then up the west side of the continent.
Why is this shipping route so important?
Any ship passing through the Suez Canal to or from the Indian Ocean has to come via the strait of Bab al-Mandab and the Red Sea. The Suez Canal is the quickest sea route between Asia and Europe and is particularly important in the transportation of oil and liquefied natural gas (LNG). About nine million barrels of oil per day were shipped through the Suez Canal in the first half of 2023, according to freight analytics firm Vortexa.
We are monitoring your cargo daily and will alert you of any issues.
So far, all cargo has been safe, sometimes late. In the meantime, we have no choice but to pay those extra charges to the steamship lines on your behalf as the cargo owner, and then send you a revised invoice. Please also be prepared for delays if you are considering sending time-sensitive cargoes.
Thank you for your dedication to supporting those vulnerable communities torn by war and famine.
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