“Navigating Red Sea Crisis: Why Waiting on Freight Rates Matters”

Red sea attack, Steep rise in ocean shipping rates. Wait or Ship now??

The recent surge in attacks by Yemen’s Houthis in the Red Sea and Gulf of Aden has unquestionably disrupted global trade, causing a sharp incline in ocean shipping rates. Understandably, many of you are grappling with the decision of whether to ship goods now or await potentially lower freight rates. Sailon Logistics guidance to all inquiring customers is to WAIT, and here’s why.

Firstly, the previous escalation in shipping costs during the COVID-19 pandemic was primarily driven by an artificial surge in demand. This was fueled by significant economic support in Western nations, which, in turn, inflated shipping demand. However, the current scenario presents a different picture with weakened global economic demands. Consequently, the recent spikes in shipping costs are not likely to be sustainable.

Secondly, while alternative routes via South Africa might seem plausible, the extended transit times associated with these routes make them impractical. Adding inventory with higher costs and longer lead times at this juncture might not align with your business objectives.

Lastly, the sudden spikes in shipping rates can be perceived as attempts by shipping companies to recoup losses incurred during the post-pandemic period. However, the odds are stacked against these companies due to the prevailing weaker demand in the market.

We understand the significance of your decisions in navigating these challenging times. Our recommendation to wait is based on careful analysis and consideration of the current economic landscape. Patience might well be the key to avoiding unnecessary costs and maintaining efficient logistics operations.

Rest assured, Sailon Logistics is continually monitoring the situation and will keep you updated on any significant developments. Your trust and patience during this period are greatly appreciated.