World
Global Shipping Crisis
— 2 mins read
Deliveries from China now take up to 16 weeks
British manufacturers are waiting up to 16 weeks for goods from China as war in the Middle East and drought in Panama and Europe choke the world's main shipping routes at the same time.
Katy Davies, managing director of Cambridgeshire electronics firm Cap Air Systems, said a delivery of 15,000 items took 16 weeks instead of the usual eight to 10. 'The pricing has gone bananas, some of it changing every two months', she said.
Four routes in trouble at once
The Strait of Hormuz previously carried about a fifth of the world's oil and gas, according to US Energy Information Administration data. Transits have fallen sharply since the US-Iran conflict escalated in February.
In the Red Sea, Iran-backed Houthi forces declared a naval blockade against Saudi-linked shipping in July and have resumed attacks on vessels. The Suez corridor previously carried close to 15% of global sea trade. Container ships from Asia to northern Europe now sail around the Cape of Good Hope instead, adding 10 to 15 days to each trip.
The pricing has gone bananas, some of it changing every two months. Every day it's just like: where's my stuff, and how much is it going to cost?
In Europe, the Rhine at Kaub fell to 10cm, below the previous 2018 low, forcing barges to sail part-loaded and pushing freight onto roads. Similar multi-route squeezes hit trade in 2021 to 2022, during Covid and the Suez blockage, and again in the 2023 to 2024 Red Sea crisis.
Freight rates more than double
Spot rates for a 40ft container from the Far East to northern Europe are up 121% since February to $4,909, according to Xeneta, a private freight analytics firm. Its chief analyst Peter Sand said rerouting around Africa 'is becoming a permanent structural change'.
Judson Smythe, managing director of MGS Technical Plastics in Blackburn, said deliveries from China that took eight weeks now take 12 to 14, with his freight rates 10 to 15% higher.
Shipping lines cash in
James Hookham of the Global Shippers Forum, an industry body funded by the companies that ship goods, said carriers ordered too many ships before the crisis and are keeping rates high to cover it. Carriers dispute that, pointing to war, drought and longer routes.
What it means for your bills
Inflation hit 2.9% in July, up from 2.6% in June, according to the Office for National Statistics. Suren Thiru, chief economist at professional accountancy body the ICAEW, said it could top 3.5% this year, and 4% if the US-Iran conflict escalates.
Faye Skelton of Make UK, an industry-funded lobby group for manufacturers, warned that outbound delays make British exports less attractive abroad. Smythe is bringing work back in-house instead. 'The instability is a chance to double down and back British manufacturing', he said. The Panama restrictions take effect in early September.
