Major incidents affecting shipping, such as the recent Baltimore bridge disaster and the Red Sea crisis, are highly detrimental to global supply chains.
Attacks by Houthi rebels on vessels in the Red Sea have forced ships to take the longer route around South Africa’s Cape of Good Hope, resulting in severe cargo delays and driving up sea freight rates significantly.
In the wake of a ship’s collision with Baltimore’s Francis Scott Key Bridge in March, supply chains on the US East Coast are not expected to stabilise until at least next year.
The South African Association of Freight Forwarders’ (Saaff) Cargo Movement Update of May 24 noted that the global shipping industry was continuing to grapple with geopolitical tensions, climate change and pandemic aftermaths.
“Conflicts in Ukraine and Gaza, alongside US-China economic disputes, threaten maritime trade routes, while climate impacts exacerbate port congestion. Notable disruptions, such as the Ever Given Suez Canal blockage and the collapse of the Baltimore bridge, underline the fragility and vulnerability of critical choke points, significantly affecting global trade flows,” the report says.
Current issues include persistent port congestion, which affects 5.3% of the global fleet. This is primarily due to geopolitical crises like the Red Sea conflict, which has increased transit times on Asia-Mediterranean routes by 39%, Saaff adds.
Ongoing economic uncertainty and multiple airline strikes have also caused significant delays in Europe.
Furthermore, delays in ocean freight are leading to higher airfreight rates and lower capacity in China and India.
Trade lane manager for ocean at Bidvest International Logistics, Nicoleen Nielson, says the Red Sea conflict is causing extended lead times for cargo moving from Europe to China, sometimes up to 30 days.
“These longer transit times are impacting South Africa in the form of equipment and vessel shortages,” she says.
“Equipment is also failing at South African ports. Compounding the problem is that MSC, the largest carrier out of the Far East to South Africa, has decided to allocate its bigger vessels to trade between the Far East and Europe. This has cut about 4 000 TEUs of volume from the Far East to South Africa. Suddenly, people are trying to find space on smaller vessels for equipment.”
Logistics operators are monitoring developments and looking at alternative ports to avoid delays.
Diversifying suppliers and routes is helping to minimise dependency on a single source or trade lane. In addition, maintaining buffer stocks of critical materials and developing and implementing contingency plans for various disruptions - and staying informed about global developments - are key to operating in the current volatile environment.
