Red Sea Security Update
After a year of relative calm in the global shipping and supply chain we are once again facing challenges caused by the security situation in the Red Sea.
Concerns remain that the afore-mentioned security measures will not be sufficient for major shipping companies to resume Red Sea transits any time soon. In the meantime, in cases where feasible, they are rerouting most vessels via the Cape of Good Hope until safety at the Red Sea is restored. We currently have 4 containers in transit that have been re-routed and expect more to be changed in the coming days and weeks.
The re-routing of container ships adds up to 14 days to transit times for goods we source in China. Currently we do not see this as having any adverse effect on our ability to supply our customers on time as we came into the New Year carrying improved levels of stock and we have adjusted our forward ordering patterns to reflect this increased lead time.
The unstable conditions do however continue to exert upward pressure on freight rates, insurance premiums and spot rate indexes, and we have already seen a trebling of the spot rate.
All the information we are receiving indicates that this trend will continue. We do, however, have a long-standing surcharge mechanism in place to cover exactly this kind of spike in cost. We expect the level for surcharging will be breached this month and therefore first charges will be applied to March invoices.
We will continue to provide updates as the situation evolves. For any immediate questions, concerns or clarification please do not hesitate to contact us.