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Shipping freight rates spike as more Red Sea attacks predicted  

Container freight rates have surged by approximately 30% in the last couple of weeks due to diversions made necessary after a spate of attacks by Iran-backed Houthi rebels since November. 

Cargo owners and shipping lines are expecting significant disruptions for the rest of year, adding time and costs to ocean routes, forcing many companies to plan shipments of goods for the festive season early as attacks by Yemen’s Houthis force ships to take longer routes.  

Data on Xeneta (the leading ocean and air freight rate benchmarking and market intelligence platform) indicates rates per FEU (40ft-equivalent shipping container) stood at USD 1 875 between the Far East and Mediterranean on 14 December – already an increase of 25% on the previous week. However, shippers are being quoted upwards of USD 6 500 for high priority shipments on Mediterranean Shipping Company’s (MSC) Diamond Tier service. 

Logistics UK’s Head of Trade and Devolved Policy Nichola Mallon said: “We continue to monitor the impact of surcharges and price increases on our members who are the UK’s exporters and importers.   

“The diversion around the Cape of Good Hope as a result of ongoing attacks in the Red Sea has undoubtedly increased costs for shipping lines but we are encouraging our members to stress test the charges being applied to ensure they are warranted.   

“We have also met with the Business and Trade Minister and with the UK Competition and Markets Authority on the need for greater transparency and scrutiny of surcharges as ultimately it is the UK consumer who pays the price”.  

Prices have not yet surpassed the peak seen immediately after Yemen’s Houthi militant group began targeting vessels in November. But they are rebounding during a usually quiet period for shipping in the spring months.   

Typically, the peak period occurs between late summer and autumn, when retailers start importing goods for the November Black Friday sales and Christmas shopping season. “The peak season has been brought forward,” said Michael Aldwell, head of sea logistics at Kuehne + Nagel, one of the large freight forwarders that handles goods and sets the price of shipping for retailers. 

Published On: 30/05/2024 15:00:00


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News In Brief

Maritime Transport to build £750 million Rail Freight Interchange. 

The project will see Maritime Transport develop a 40-acre new Strategic Rail Freight Interchange (SRFI) capable of handling 16 trains per day at full capacity, strengthening rail freight connections between the Midlands and major UK ports including Felixtowe, Liverpool, London Gateway, Teesport, Southampton and Mossend.  

This shift from road to rail is expected to remove over 83 million HGV miles from the UK’s road network annually, potentially saving around 70,120 tonnes of CO2 emissions. The project is currently awaiting approval of a Development Consent Order from the Secretary of State for Transport, with a decision expected in September 2024.  

Logistics UK’s Senior Policy Advisor Ellis Shelton said: “The environmental and logistical advantages of the shift from road to rail are substantial. The SRFI will not only ease road congestion but also aligns with the UK's broader environmental goals, promoting sustainability and reducing the carbon footprint of the freight industry.

"The successful approval and implementation of this SRFI will mark a pivotal moment in the UK’s transition towards more sustainable and efficient freight transport solutions, showcasing a commitment to innovation and environmental stewardship.” 

John Williams, Executive Chairman of Maritime Transport, said: “This development will strengthen our rail-connected network and our strategy of decarbonising the full load supply chain in the UK, moving cargo closer to the end user by rail. 

“Our strategy of decarbonising the supply chain will extend to the introduction of BEV (Battery Electric Vehicles) to perform first and final mile transport, creating the most sustainable full load networked, intermodal logistics offering for occupiers at HNRFI and beyond.” 

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