EMEA News
Red Sea Diversions: Congestion Worries Grow Ahead of Lunar New Year Holiday
Marine fuel stakeholders may experience fresh logistical hurdles for their bunkering operations in the coming weeks with analysts warning the upcoming Lunar New Year holiday in early February could add to the already increased risk of congestion due to vessel diversions to avoid the Red Sea.
Major carriers such as Maersk have halted all Red Sea voyages until further notice in response to the current security concerns in the region, opting to instead reroute vessels around the Cape of Good Hope.
The diversions mean longer journey times, with some carriers reportedly choosing to speed up vessels to help with scheduling requirements and address congestion concerns.
Both practices are are driving up bunker costs and fright rates.
Indeed, data from Freightos indicates spot rates on for a 40-foot container on the Asia to northern Europe route has risen 173% to over $4,000 compared to rates just before the diversion announcements were made.
The number of Suez transits has consequently fallen 28% y-o-y in the 10 days to Jan 2, according to data from IMF PortWatch.
Freightos’ head of research, Judah Levine, Wednesday highlighted that carriers also have to factor in the longer return trips needed to repatriate empty containers, and warned the upcoming Lunar New Year holiday is now adding to the risk of congestion.
“If carriers begin to omit port calls and offload containers at alternate destination ports to keep up, it could contribute to delays for shippers and the possibility of congestion at larger hubs,” Levine said.
“This is no longer taking place during the holiday lull either; demand may be increasing as shippers start to pull forward volumes to make up for longer transit times and in preparation for China’s Lunar New Year holiday in early February. Together, this could increase the risk of congestion.”
