The conflict in the Middle East continues to cause problems across the supply chain. Within the last day, a container ship and at least two tankers in the Persian Gulf were attacked. Most services to and from the region are still suspended. Select air carriers are moving cargo on key Middle East routes, though the backlog is long and rates are high. Congestion is growing at ports in the region and surrounding areas, including Southeast Asia gateways like Singapore, Port Klang, and Colombo. The Journal of Commerce is reporting that 100,000 TEU of cargo is currently in limbo between Far East origins and planned Middle East destinations; India ports are being considered as an offloading solution.

Fuel increases are appearing across all modes. Ocean carriers are introducing emergency bunker charges, while domestic truckers and airlines are increasing fuel surcharges.

Rates are increasing in general as well. Carriers are planning a significant spot rate increase for Asia-US trade as of March 15, though it’s still unclear how much of the increase will stick. Air freight rates across virtually every trade lane are up this week.

Ocean contract negotiations have slowed. Some carriers have officially paused negotiations, others are delaying offers, and some discussions are continuing. The situation is very dynamic and evolving by the day.

Much depends on the duration of the conflict. Congestion issues will worsen the longer the situation lasts. We will also begin to see equipment shortages at key ports.

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Rachel Shames
VP, Pricing & Procurement
CV International, Inc.