Red Sea: Asia-Europe freight rates rise again

Global shipping traffic remains highly disrupted. After further attacks on the few merchant ships that ventured to travel through the Red Sea under the escort of American forces, the shipowners decided to continue to avoid the area leading to the Suez Canal until further notice.

The shipping companies have announced anew increase in freight rates from 15 Januaryfor trade between Asia and Europe. This second price increase was already expected since the end of December, when the first increase accompanied the decision to bypass Africa by the Cape of Good Hope (cf.Red Sea: Bypassing the Cape of Good Hope will increase delays and costs). Even if they climb considerably, however, freight rates remain well below the levels achieved during the pandemic. Starting January 15, rates should be around $3,500 / 20′ and $6,500 / 40.

Faced with the multiplicity of geopolitical disturbances that have upset shipping in recent months, new routes are being explored to transport goods from Asia to the European Union. In addition to the maritime passage through the Cape of Good Hope, themedian corridor, also called TITR (Trans-Caspian International Transport Route), could be an alternative. This commercial road, which combines rail and sea, connects South-East China with Europe by travelling through Kazakhstan, the Caspian Sea, Azerbaijan and through either Georgia and the Black Sea or Turkey. In order for the 11 million tons of goods to be transported there by 2030, three times more than today, and 130,000 containers in 2040 compared to 20 000 today, investment and infrastructure modernization are needed. While Azerbaijan, Georgia, Turkey and Kazakhstan are committed to improving regional connectivity, the European Bank for Reconstruction and Development (EBRD) will inject EUR 100 million to modernise the Kazakh railway network and the Chinese government is investing in the South Caucasus, including Georgia.

For the time being, the median corridor represents only 4% of the volume of containers transiting between China and the European Union. If it offers an alternative route, the route is multimodal, long (twice as much as the railway corridor passing through Russia) and expensive (nothing that the crossing of the Caspian Sea for a container amounts to 500 dollars), the formalities are complex due to the many borders to cross and the waiting time for the loading/unloading of containers can claim up to ten days.

To go further...

• Sales Administration (SDA) Subcontracting Export
• Import/export flow management (air & maritime)
• Diagnosis of international logistics flows

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