Ocean Shipping Rates Surge as Red Sea Attacks Continue

livemint.com:

Global shipping prices are continuing to rise as Houthi rebels keep up attacks on cargo vessels in and around the Red Sea. The disruptions are at a key point for ships passing through the Suez Canal and are creating ripples across supply chains in Europe and the U.S., delaying shipments and raising transportation costs. Average worldwide costs of shipping a 40-foot container rose 23% in the week through Jan.

18 to $3,777, according to London-based Drewry Shipping Consultants, more than doubling in the past month. The increases are being felt far beyond the disrupted trade routes that link China with Europe and the U.S. East Coast.

Spot-market rates to ship a container from China to Los Angeles rose 38% in the week through Jan. 18 to $3,860. “Volatility is back, big time in international container shipping," said Philip Damas, managing director of the Drewry Shipping Consultants group.

Big companies that have longer-term contracts with ocean carriers are largely immune to spot-market swings. But Damas said many such companies are paying surcharges of 20% or more on top of contract rates to compensate for higher shipping costs such as fuel and insurance. Houthi rebels in Yemen are attacking commercial vessels in response to Israel’s war with Hamas militants in Gaza.

The rebels say they are targeting ships with links to Israel, but many vessels that have been hit have no apparent connection to Israel or its allies. A U.S.-led coalition has positioned warships in the region to protect commercial vessels and has launched airstrikes on Houthi targets in Yemen, but that hasn’t put a stop to Houthi attacks on vessels. Several cargo vessels were struck by missiles or drones during the past week.