Red Sea attacks continue, despite naval protection, and shipping costs soar

Source: The Loadstar
Date: 3rd January 2024

Supply chains are in chaos, as it appears even the power of the US Navy is proving insufficient to deter attacks on commercial shipping in the Red Sea, with costs set to soar ever higher.

Having just days earlier said it would resume services through the waterway, Maersk announced it would re-suspend services after Yemen-based, Iranian-backed Houthi militants attacked its 15,000 teu box ship Hangzhou on Saturday.

In an update to customers, the Danish carrier said: “We have decided to pause all transits through the Red Sea and the Gulf of Aden until further notice.”

The attack on the Hangzhou began around 5pm on 30 December when it was struck by a missile and, while the US Navy intercepted two further missiles aimed at the vessel, a more audacious attack commenced in the early hours of Sunday when four small boats seeking to land militants aboard to take control of the ship.

However, this was thwarted by the ship’s security team and US naval helicopters.

According to reports, three of the four small vessels used in the attack were sunk, with all militants killed, but this was not sufficient to prevent Maersk from reinstating the suspension of services it had relaxed on 24 December.

A coalition of US and it is claimed, units from 20 other countries aimed to protect commercial shipping using the Red Sea through Operation Prosperity Guardian, launched on 19 December.

And while the US has shown relative speed in addressing threats, the superpower has seemingly failed to get its coalition partners onboard with almost half of the parties involved refusing to publicly declare their participation.

For shippers, this has led to a surge in costs amid a raft of new surcharges by carriers and a concomitant delay in deliveries.

Of the major carriers, CMA CGM is the only one willing to allow its ships to transit the Red Sea, and a source claimed this only involved an “occasional vessel” and “only when there is a French warship on hand to offer security”, meaning more costs.

Rates are increasing, with a large number of acronyms and mechanisms being employed, from established GRIs and PSSs to new ones.

These include contingency surcharges, contingency adjustment charges and emergency contingency surcharges. Unless you accept, you don’t get your freight moved.

CMA CGM has implemented them on all ‘floating freight’, which means anything in transit on exports. Maersk has also said that, by making a booking, contractually you accept the surcharges, regardless of contract or spot rate.

Acknowledging that sending vessels on longer routes would add to carrier administration and operating costs, the source said they would not be surprised if part of the aim behind the new surcharges was to help carriers arrest the bottoming-out of rates that encapsulated 2023.

NEOLink cooperated with our order processing system. He did not replace it or force solutions. Logfret did it better than other companies on the market – it adapted its system to ours. Logfret didn’t come to us saying, “We have this solution, and you either use it or we won’t cooperate.

Procurement Director

Pumps Manufacturer

We made a huge improvement in global visibility with a global platform—anyone can log into NEOLink and look at a shipment anytime, anywhere in the world. We wanted a freight forwarder with a good technology platform, which could handle the complexities of our business and we found NEOLink!

A global leader in performance materials and specialty chemicals

My suppliers have less or zero experience with international logistics. Thus, not able to create proper documentation which leads to tremendous delay. Thanks to Logfret who provide training to all suppliers and work with us to build up a consolidation hub to reduce transportation costs significantly.

One of the world’s leading designers, manufacturers and distributors of ride control products