Red Sea Crisis Butterfly Effect: Beware of Empty Container Shortage
In addition to delivery delays and freight rate increases, the Red Sea crisis may also bring about a butterfly effect, with an expected shortage of empty containers, which may have a profound impact on the supply chain in the run-up to the Chinese New Year.
FreightRight CEO Robert Khachatryan said the normal voyage cycle has almost doubled as a result of the rounding of the Cape of Good Hope. However, he believes rising freight rates and longer transit times will only have a short-term impact.
Flexport believes that the Red Sea crisis will have "a lot of spillover effects, especially on containers."
"Container shortages and port congestion are expected. A shortage of empty containers could hit Asian ports as early as mid-to-late January."
Lars Jensen, chief executive of shipping consultancy Vespucci Maritime, warned, "We may have enough containers, but they may not be in the right place. Empty containers needed for China's peak export season will end up being stuck elsewhere."
Vessels on intra-Asia routes are also affected by empty container availability issues. For example, ports such as Jebel Ali Port in the United Arab Emirates and Chennai Port in India rely heavily on container resources transported through the Suez Canal.
Flexport recommends that to ensure empty containers and on-time shipments, shippers should reserve space four to six weeks before planned departure.
In addition, Flexport also recommends incorporating the extended delivery cycle into inventory planning, making calculations for the increase in transportation costs, trying alternative routes, modes and quality services, strengthening communication with logistics providers, and being informed of any latest developments in a timely manner.
Lars Jensen said, “In this special case, there is really no other better option than ‘keeping an eye on’ your logistics provider.”
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