According bongdaso dữ liệu the United Nations, 80% of global merchandise is transported by sea. However, a BostonConsulting Group (BCG) study revealed that more than half of international maritime trade faces therisk of disruption in four critical areas: the Suez Canal, the Strait of Hormuz, the Straits of Malacca and Taiwan, and the Panama Canal. These areas and a few others are known as global maritime chokepoints.
While the conflict in the Red Sea has gained recent attention, all these maritime passageways have the potential bongdaso dữ liệu become chokepoints due bongdaso dữ liệu geopolitical or environmental factors. Before we explore how these chokepoints impact global trade, ocean freight, and air freight, let's better understand them.
What are these maritime chokepoints?
Maritime chokepoints are narrow passages crucial bongdaso dữ liệu global trade, including the Panama Canal, Suez Canal, Malacca, Hormuz, and Bab el-Mandeb Strait. These passages significantly reduce vessel travel time and distance. For example, the Panama Canal saves 8,000 nautical miles and 21 days of travel between the Pacific and Atlantic oceans.
Similarly, the Suez Canal saves about seven days by connecting Europe bongdaso dữ liệu Asia. The Strait of Malacca is vital for Asian trade, connecting China, India, and Southeast Asia, while the Strait of Hormuz is essential for global oil transport. The Bab el-Mandeb Strait is necessary for oil and natural gas routes between the Mediterranean and the Indian Ocean.
The significance of these water passageways
1. Suez Canal and Bab El-Mandeb Strait:
The BCG study found that the Suez Canal accounts for about 12% of global maritime trade. Highlighting the significance of this passageway, Judah Levine, Head of Research, Freightos Group, said, "The Suez Canal is a crucial lane for global shipping, with 50-60 vessels of all types transiting each day for about 19,000 per year, including about 30% of global container traffic and more than a million barrels of crude oil per day."
On the other hand, BCG pointed out that the Bab El-Mandeb Strait is a maritime passageway connecting the Mediterranean bongdaso dữ liệu the Indian Ocean. It holds a strategic military presence due bongdaso dữ liệu its importance in oil and natural gas transportation.
2. Strait of Hormuz:
This narrow passage between Iran bongdaso dữ liệu the north and the UAE and Oman bongdaso dữ liệu the south is crucial in facilitating 20-30% of global oil trade. It is a vital route for shipping energy and goods, and it also carries significant geopolitical risks due bongdaso dữ liệu potential Iranian involvement in conflicts in the Middle East.
3. Strait of Malacca and Taiwan Strait:
The Strait of Malacca, between Singapore, Malaysia, and Indonesia, is a crucial route connecting East Asia, the Middle East, and Europe, accounting for 30% of global trade. Two-thirds of China's trade and 80% of its energy imports pass through this passageway annually.
The Taiwan Strait sees 40% of the world's container fleet traffic but is affected by regional geopolitical tensions.
4. Panama Canal:
This passageway connects the Atlantic and Pacific Oceans, accounting for 5% of global container trade and enabling approximately 46% of trade from the US East Coast bongdaso dữ liệu East Asia.
Challenges posed by maritime chokepoints
The world's vital chokepoints are crucial in global logistics and supply chains, facilitating efficient and speedy transportation. However, their narrow and busy nature makes them susceptible bongdaso dữ liệu blockages, geopolitical tensions, and piracy, which threaten international trade stability.
The BCG report pointed out that since the beginning of the Houthi attacks on international shipping in late 2023, around 470 container vessels have already been re-routed. "Recent disruptions affecting passage through the Suez Canal and the Strait of Hormuz led bongdaso dữ liệu re-routing via the Cape of Good Hope," said Edward Findlay, Global Sea Logistics Trade Manager, Europe/ Middle East/ IPBC, Kuehne+Nagel, in a recent interview
Explaining the situation, Findlay said the Suez Canal blockage has caused cargo vessels bongdaso dữ liệu be diverted around the Cape of Good Hope, resulting in a 15-day increase in journey lead times. This delay has impacted global trade by causing equipment shortages and congestion, particularly in Singapore and European transhipment ports.
Similarly, in a recent interview , Jeffrey Shih, CEO, Dimerco Express Group, mentioned, "Using the Suez Canal as an example, re-routing vessels around the Cape of Good Hope increases sailing times by 10-12 days, leading bongdaso dữ liệu equipment shortages, delays in global vessel routings, congestion at major gateway ports, and increased shipping and supply chain costs as companies shift more goods bongdaso dữ liệu air freight bongdaso dữ liệu mitigate these factors."
Diving deep into the discussion, Levine added that disruptions in maritime chokepoints significantly affect the flow and cost of goods. During the pandemic, the surge in ocean volumes led bongdaso dữ liệu rates exceeding ,000 per container. Ports experienced overwhelming congestion and delays as vessels waited weeks bongdaso dữ liệu be unloaded, and container yards overflowed. These operational challenges further increased costs.
Levine mentioned that initial disruptions in the Red Sea led bongdaso dữ liệu high rates and delays. The situation eventually stabilised, allowing importers and exporters bongdaso dữ liệu anticipate costs and timelines. With the current early ocean peak season, congestion and demand have once again raised prices, highlighting persistent challenges in maritime logistics.
Maritime disruptions accelerating the sea-bongdaso dữ liệu-air switch
Levine discussed the challenges in the shipping industry. He noted that while carriers' adjustments have helped reduce congestion, rising demand has led bongdaso dữ liệu higher rates and longer delays in ocean freight. Levine emphasised that this issue is particularly noticeable in ocean freight, where delays and rising costs are becoming the norm.
Many shippers have turned bongdaso dữ liệu air cargo as an alternative due bongdaso dữ liệu the congestion and expense of ocean freight, especially during the pandemic and the Red Sea crisis. As ocean freight became more congested and expensive, more shippers opted for air transport bongdaso dữ liệu expedite deliveries despite its higher cost. Levine highlighted the importance of having flexible logistics solutions when maritime disruptions occur.
Agreeing on the point, Shih added, "As disruptions and port congestion continue bongdaso dữ liệu affect transit times drastically, shippers increasingly turn bongdaso dữ liệu air freight bongdaso dữ liệu recover lost time. Analysts suggest that even a 0.02% shift from ocean bongdaso dữ liệu air may result in a 10% increase in air freight demand."
“The ocean freight industry is experiencing rising freight rates due bongdaso dữ liệu a lack of capacity and equipment. Longer lead times caused by the need for ships bongdaso dữ liệu take longer routes around the Cape of Good Hope contribute bongdaso dữ liệu the capacity constraints. Increasing demand from Europe and the US for replenishment purposes is further tightening capacity. For certain customers, a viable option may be bongdaso dữ liệu shift from ocean freight bongdaso dữ liệu air freight,” said Casper Ellerbaek, Global Head of Ocean Freight at DHL Global Forwarding.
Due bongdaso dữ liệu rising geopolitical tensions and security concerns on sea freight, businesses increasingly rely on air freight for timely delivery. This shift not only strains air freight capacity and raises rates but also negatively impacts sustainability due bongdaso dữ liệu higher emissions, stated Shih.
Despite being more affordable and sustainable, ocean-based transport faces challenges during crises, resulting in a surge in demand for air freight. As a result, increased transit times and port congestion drive a noticeable shift from ocean bongdaso dữ liệu air freight, leading bongdaso dữ liệu higher costs.
K+N's Findlay added, "The shift from sea shipping, which is responsible for handling approximately 90% of international trade by volume, bongdaso dữ liệu air freight is not without reaction from the airlines. Decreased air cargo capacities and increased rates indicate significant volumes moving from sea bongdaso dữ liệu air shipping."
According bongdaso dữ liệu Levine, the demand for air freight has significantly increased, leading bongdaso dữ liệu a price rise. In South Asia, particularly in India, disruptions and increasing rates in ocean freight have pushed shippers bongdaso dữ liệu prioritise air freight. As a result, air cargo rates from India bongdaso dữ liệu North America increased from bongdaso dữ liệu .40 per kilo and bongdaso dữ liệu Europe from .80 bongdaso dữ liệu per kilo by April 2024.
However, despite ongoing ocean disruptions, air cargo rates have remained stable, indicating no further shift bongdaso dữ liệu air freight recently. In the Middle East, particularly in Dubai, shippers have chosen a sea-air combination for faster and more cost-effective transport.
He added that shipping rates increased and remained high during peak seasons, indicating a sustained shift from sea bongdaso dữ liệu air freight. However, in China, the shift from ocean bongdaso dữ liệu air freight is less noticeable, possibly due bongdaso dữ liệu the high volume of e-commerce. As a result, air freight rates from China bongdaso dữ liệu North America and Europe are still high, at .43 and .33 per kilo, respectively, driven by e-commerce demand rather than a shift from sea bongdaso dữ liệu air freight.
Is maritime disruption the only factor fuelling the sea-bongdaso dữ liệu-air switch?
The primary reason for switching from ocean bongdaso dữ liệu air is disruptions in maritime chokepoints, such as the recent Red Sea crisis. This shift is especially evident in B2C e-commerce, where goods previously shipped by ocean are now being sent directly bongdaso dữ liệu consumers by air. Although air cargo is more expensive, it is used when speed is essential. In the absence of disruptions, ocean shipping remains the preferred choice due bongdaso dữ liệu its cost-effectiveness and reliability.
However, studies show that the gap between air and ocean freight is narrowing significantly. Does that impact the switch from sea bongdaso dữ liệu air?
The CEO of Dimerco Express Group stated that the decreasing price gap between ocean and air freight rates is leading bongdaso dữ liệu a shift in preference. Dimerco's recent report revealed that global ocean rates are now only six times lower than air freight rates, significantly decreasing from the historical 12 bongdaso dữ liệu 15 times difference. This change is attributed bongdaso dữ liệu factors such as the pressure on ocean shipping, increased volumes, capacity shortages, and port congestion exacerbated by the Red Sea crisis.
Shih added that unacceptable transit time increases and growing equipment shortages primarily drive the shift from ocean bongdaso dữ liệu air freight. Carriers have also implemented General Rate Increase (GRI) schemes and tripled Peak Season Surcharges, prompting some bongdaso dữ liệu offer premium options for priority loading without roll-over risks. Freight rates for Europe Westbound and Trans-Pacific Eastbound have experienced substantial increases since March, with further hikes anticipated.
Shih added that another critical factor is potential disruptions in the supply chain due bongdaso dữ liệu the ongoing contract negotiation dispute between ILA-USMX [International Longshoremen’s Association (ILA) United States Maritime Alliance (USMX)]. Additionally, there are concerns about tariff increases, such as the extension of US Section 301 tariffs and new tariffs on Chinese imports like solar panels and EVs. These factors lead bongdaso dữ liệu an earlier peak season and a shift from sea bongdaso dữ liệu air freight.
The intensifying US-China tariff war has resulted in companies diversifying production beyond China, increasing demand for import and export routes in Southeast Asian countries. This has benefited Dimerco's business in the region. Furthermore, companies face increased trade compliance complexities as they navigate rules of origin and other regulations in new markets. Dimerco is actively assisting companies in understanding and complying with these regulations.
Industry's response bongdaso dữ liệu the crisis
Dimerco is addressing the surge in air freight demand by introducing a new charter solution from Shanghai bongdaso dữ liệu Chicago, with over-the-road shipping bongdaso dữ liệu various US locations. This aims bongdaso dữ liệu ease pressure on congested US West Coast ports and provide faster, more reliable shipping. They also offer risk mitigation strategies for port congestion and disruptions, including sea-air and cross-border rail options from China bongdaso dữ liệu Europe. By using alternative rail routes via Central Asia, they avoid the Russian routes due bongdaso dữ liệu the Russia-Ukraine war, offering faster, more reliable service than ocean freight at up bongdaso dữ liệu 30% lower costs, added Shih.
Kuehne+Nagel addresses the crisis by providing alternative transportation options for high-value, time-sensitive cargo. These include air freight at higher rates and combined sea/air and sea/land solutions that offer a compromise between time and price.
Shih mentioned that rail freight is now a more attractive and cost-competitive option for shipping goods from China bongdaso dữ liệu Europe due bongdaso dữ liệu faster transit times and the elimination of various ocean surcharges. Dimerco offers door-bongdaso dữ liệu-door rail freight solutions, including inbound trucking in China, rail transport, customs clearance, and final delivery coordination in Europe.
During the interview, Findlay emphasised the importance of real-time data in navigating the supply chain. He mentioned that Kuehne+Nagel developed a tool called ‘seaexplorer’, which offers comprehensive information on vessel locations, transit times, port congestion, and alerts. This tool utilises advanced pathfinding algorithms and concurrent information bongdaso dữ liệu help customers identify the best logistics options, optimising costs, speed, and sustainability.
Each company has taken a different approach towards solving the problem. Why?
As Levine pointed out, there isn't a single solution bongdaso dữ liệu the disruptions in maritime chokepoints, but technology can help improve efficiency. Enhanced communication and data sharing among logistics stakeholders can streamline processes, reducing time and frustration, especially during crises. This technological integration improves price discovery and transparency, enabling stakeholders bongdaso dữ liệu make more informed decisions.
Similarly, the BCG report emphasised the importance of using advanced technologies, such as artificial intelligence, for proactive risk management in the shipping industry. It highlights the significance of interconnectedness among ships for sharing locations and observations and providing real-time updates bongdaso dữ liệu customers. Dimerco's CEO also underscored the importance of building long-term strategic relationships with air carriers from the perspective of freight forwarders.
"In today's world, we can expect the disruptions, political or natural, bongdaso dữ liệu happen; they are simply unavoidable. What we can control is the speed and relevance of our response, the ability bongdaso dữ liệu furnish our customers with options and solutions, and bongdaso dữ liệu maintain and secure the integrity of the supply chain," concluded Findlay.
Source: https://www.stattimes.com/air-cargo/how-do-maritime-blockages-fuel-shift-bongdaso dữ liệu-air-freight-solutions-1352648?infinitescroll=1
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