Shipments delayed, spike in freight rates

Shipping lines are now re-routing their vessels avoiding the Red Sea contributing to sharp increases in freight rates and that is expected to cause further congestion and delays in European ports in future.

Increased attacks on commercial vessels plying the Red Sea saw a number of major shipping lines opting to divert traffic from the Red Sea to around the Cape of Good Hope. For those opting to continue their passage across the Suez Canal where military assistance is provided, the insurance premiums have surged.

Shipping industry sources point out that shipping lines are imposing US$1000-4000 per container due to the current crisis.

Transit times have been longer by one week to about 10 days and moreover with congestion and delays at the European ports this is likely to lead to inadequate containers available that will come back from Europe to Asia to load cargo. This will cause a further increase in freight rates that could go up by about 10-20 per cent.

Exporters point out that while the freight rates have increased four times over the delays are already occuring with problems in getting the boxes shipped out of Colombo.

National Chamber of Exporters President Jayantha Karunaratne said freight rates have increased four or five times over.

It was pointed out that due to the crisis on Suez canal a number of containers were blocked in Malaysia and India where a number of boxes were headed to Europe.

It was noted that shipments sent out two weeks ago to Mundra, India were sent back to Colombo stating that they will be shipped from here.

Moreover, exporters point out that there are no vessel schedules given out lately with only last minute announcements made on the availability of vessels. Previously the vessel schedule was issued monthly but now this is not made available due to the delays and as a result shipments cannot be planned accordingly.

Exporters note that a journey of 26 days in the past would now take up to 60 days travel time to some destinations in Europe.

Shipping industry sources point out that the Colombo Port is not overly impacted but within the next three months there is a possibility that undue delays could result in vessels bypassing Colombo to catch up on their schedules impacting on transshipment volumes.