Recent disruptions are leading to ocean shipping rates spiking internationally, particularly on the U.S. West Coast. Rates for specific shipments from Asia to the U.S. West Coast have surged over 50% at the start of 2024. The China-West Coast FBX rate of $2,713 on January 3^rd was over 95% higher than in January 2020. The rates are going so high because of the current disruptions in the international shipping industry. In particular, the Israel-Gaza conflict is causing containerships to switch routes and Panama Canal Restrictions. Carriers have already rerouted more than $200 billion of cargo from the Red Sea to other locations.

Why Are Ocean Shipping Rates Spiking

The most significant contributor to the current surge in West Coast rates is the situation happening in the Red Sea. A side effect of the Israel-Hamas war is that the Houthi rebels are attacking shipping routes in support of Hamas. Since mid-November, the Houthi has carried out a total of 23 attacks on containerships passing through The Red Sea. As carrier companies reroute their vessels, short routes like Asia to the West Coast are becoming more attractive. While the Cape of Good Hope has also been another alternative route, it is a longer path. A ship transporting goods from Shanghai to New York via the Cape of Good Hope can take 43 days.

Comparatively, A voyage from Shanghai to California takes nearly 17 days plus 1-5 days to move the cargo from China to New York by truck. This is causing Asia to the West Coast to be an increasingly attractive route. The increase in traffic is causing the container shipping rates to the West Coast to rise. A recent drought in the Panama Canal has also led to a growing number of carriers and surging rates. Initially, the restrictions from the draught caused Asian cargo going to the East Coast to reroute to the Suez Canal. The current situation in the Red Sea is now causing carriers to redirect again.

How Are Shippers Managing Disruption

Despite the conflict’s effect on shipping, many believe the disruptions and current rates are temporary. During the coronavirus pandemic, container rates reached record levels due to the immense demand for moving freight. Congestion and the limited capacity to handle the cargo contributed to the surge. The present situation differs since carriers can handle the rising rates more than the pandemic. The Panama Canal’s restrictions will also soon reduce, with the rainy season approaching May 2024. Tankers and dry bulk containers have not been affected by the threats and continue to transit through the Red Sea.

While current situations may seem unfavorable for international shipping, shippers are finding solutions to mitigate potential impacts on their shipments. Along with rerouting cargo, this includes being up-to-date with any events that affect the transport of goods. Exporters are also bypassing the disruptions by switching to different means of conveyance, like air or land, if possible. Another way that shippers are navigating the current situation is by getting assistance from a logistics provider. Call A1 Worldwide Logistics at 305-821-8995 for a quote to move your shipment to and from the U.S. We give you peace of mind knowing that you or your business can navigate the complex world of international shipping.