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Red Sea Shipping Alternatives to Avoid Trade Disruption

A tugboat moves along the Red Sea.
Seeking red sea shipping alternatives amidst trade disruptions? Stay updated on the events and find vital strategies for importers and international traders.
January 11, 2024
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Last Modified: January 26, 2024

Key Takeaways

  • Recent regional tensions are disrupting commercial shipping routes that pass through the Red Sea and the Mediterranean through the Suez Canal.
  • The Red Sea’s significance to global trade necessitates reliable shipping alternatives that keep people and cargo safe.
  • Shipping companies and those invested in international trade must adapt to maintain uninterrupted global trade.

Understanding of the situation and readiness to adapt are essential. It means reevaluating logistics plans, shifting strategies to avoid potential bottlenecks, and working proactively. By doing so, you mitigate the risks associated with this key shipping route, and maintain the integrity of your supply chain operations.

Update: January 19, 2023

Shipping lanes through the Red Sea and the Suez Canal continue to face disruption amidst ongoing conflict. Despite efforts to safeguard the vital entry points and alleviate the fears of major carrier lines, more ships are choosing to travel around Africa and the Cape of Good Hope. 

Shippers now face the issue of planning for long-term changes to established routes. As of this update, various shipping alternatives are being explored, including overland routes for goods traveling between China and Europe

Shipping routes being further considered include:

  • Direct shipping across the Pacific from Asian ports to the U.S. West Coast, utilizing inland routes to reach destinations throughout the nation. 
  • Overland shipping along the China-Europe Railway Express (CRE) combined with transfers to carriers crossing the Atlantic.

There has always been direct shipping between Asia and major ports such as Long Angeles/Long Beach in California. However, after struggling with congestion delays throughout 2021, routing ships through the Suez Canal and the Atlantic became popular. 

Since the direct route is still well established, it stands out as the more obvious option for shippers looking to bring in imports from places like China, Vietnam, and India

For shippers that need to reach markets in Europe and the U.S., the overland route provided by the CRE is a viable option. Freight can travel by direct rail from various production hubs in China to multiple cities in Europe, including Germany’s main port in Hamburg. 

Travel times average between 12 and 20 days depending on origin and destination points. Since conflict in the Red Sea began, volumes along the CRE rail lines have increased about 30 percent.

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Red Sea Shipping Alternatives: Why They May Be Necessary

The Red Sea serves as a strategic artery in world trade, facilitating the movement of vital goods through the Suez Canal, one of the most trafficked waterways on the planet. Recent disruptions and rising political tensions in the region are having direct impacts on global trade.

Conflict escalations are largely due to Yemen’s Houthi militants and their attacks on shipping vessels leaving and entering the Red Sea around the Bal al-Mandab Strait. Multiple ships have been fired upon when passing through the area since the attacks started in November. This raises serious concerns for international shipping and global economies. 

Despite the Houthi’s claims to only target vessels linked to Israel, vessels under multiple flags have found themselves targeted. Many carriers deem the risk too great and paused or rerouted shipments

Major carriers that have already begun rerouting ships include:

  • Maersk
  • CMA CGM
  • Hapag-Lloyd
  • MSC

Many of the ships being rerouted are large container ships, often carrying between 15,000 to 20,000 TEU’s of cargo. Other carrier companies continue to use this critical passageway despite the risks involved. 

How are the Red Sea Shipping Attacks Impacting International Trade?

The most common alternative route for ships traveling from ports in Asia to Europe and North America’s East Coast takes them around Africa and the Cape of Good Hope. The route adds between a week to 10 days to the previous transit time. 

Beyond longer journeys, there are additional impacts to global trade and shippers to watch out for:

  • Ships changing routes mid-journey cause delays through the supply chain, as estimated arrival times are extended by weeks. 
  • Longer routes consume more fuel, resulting in greater fuel surcharges
  • Additional costs related to route changes are imposed as transit disruption surcharges (TDS)
  • Delays in final delivery impact the manufacturing and sales industries, especially in the automotive sector
  • Heightened insurance rates due to the prevalence of maritime piracy off Africa’s west coast
  • Rising prices in oil, particularly since fuel giant BP, the UK-based company, is now re-routing ships to avoid the area

Hundreds of different commodities frequently travel through the Suez Canal, but oil makes up a large percentage of that. It’s estimated that about 12% of global trade, and at least three million barrels of crude oil, use the Red Sea routes daily.

Although some of these worst-case scenarios are still being avoided, being aware of the possibilities may help importers and related businesses develop contingency plans. 

Red Sea Shipping alternatives Container ship traveling by Cape Town, South Africa.

Shipping Options For Navigating Trade Disruption

The Cape of Good Hope route, while longer, offers a safer alternative to the Red Sea passage and is open all year long. Another emerging alternative is the Northern Sea Route, which, although less developed, provides a potential option for future diversification.

Unfortunately, the Northern Route, which passes above Russia and through the Arctic Circle, is only passable a few months of the year at the height of summer. 

Of course, the other viable option is simply staying the course. Neither the Red Sea nor the Suez Canal are discouraging ship passage. Quite the opposite, considering how important it is to the regional economy.

In an effort to stave off the potential economic downfall resulting from a blocked Suez Canal, several nations have formed a protection initiative in the area. The goal isn’t to escort ships personally, but serve as a deterrent presence, offering an umbrella of protection to all that pass.

Initialized by the U.S. and joined by nations such as Norway, Canada, France, and the UK, Operation Prosperity Guardian has successfully helped over 1,000 ships navigate the Bal al-Mandab Strait since going into effect in December 2023. 

Is Air Freight a Good Option?

Given the increased risks and potential delays in maritime shipping due to Red Sea attacks, turning to air freight can be a strategic move. Air cargo providers, although more costly, allow for considerable flexibility. 

On the plus side, air cargo freight benefits from:

  • Faster transit times
  • Improved security
  • Lower cargo insurance rates
  • Less risk of damage and loss

Air freight can travel via passenger craft, which often set aside a certain amount of space for cargo, or through airlines specializing in air freight. For special, time-critical cargo, chartered flights are also an option

In the case of small to medium-sized businesses, there is another reason to consider air freight, despite the added costs. When ocean transit times become longer, many large companies may try to fit as much of their cargo onto a single vessel as possible. 

Larger companies will typically have the capital to pay higher rates for this service. Unfortunately, it means that smaller loads can get rolled over onto the next available ship. Depending on the shipping schedule, that can create delays of weeks or even months. 

During peak seasons, when businesses need to get in cargo within a specific time frame, such delays can be disastrous. 

Although shipping by air may be more expensive at that moment, your products also get to market that much faster. What you pay extra for air shipping may still be less than what a delayed shipment will cost in terms of lost revenue.   

Ship passing by the Israeli city of Eliat, an access point to the Red Sea.

Tips for Importers to Minimize Disruption

In the ever-changing landscape of international trade, especially with the current disruptions in Red Sea shipping, importers need to be more agile and prepared than ever.

Here are some practical tips to help minimize disruptions and maintain a smooth flow in your import operations:

  1. Diversify Shipping Routes: Don’t rely on a single shipping route or method. Explore alternative pathways, transshipping hubs, or air freight options.
  2. Maintain Higher Inventory Levels: Given the unpredictability of shipping timelines, consider increasing your inventory levels, especially on items with higher turnover rates. 
  3. Build a Network of Reliable Logistics Providers: Cultivate relationships with multiple logistics providers or freight forwarders that offer a range of options. 
  4. Leverage Technology for Better Visibility: Work with companies that offer real-time tracking of shipments, which allows for proactive measures in case of delays or rerouting.
  5. Stay Informed on Global Events: Keeping up-to-date with international news provides awareness, enabling you to make informed decisions quickly.
  6. Develop Contingency Plans: Have clear, actionable plans for different types of disruptions. This may include having a list of alternate suppliers in different regions.
  7. Invest in Insurance: Ensure that your shipments are adequately insured to mitigate financial losses in specific circumstances
  8. Partner with Customs Brokers: Experienced customs brokers and consultants know how to navigate complex trade regulations and find efficient shipping solutions.
  9. Focus on Communication with Stakeholders: Clear and regular communication with your suppliers, logistics partners, and customers builds trust and understanding. 
  10. Enhance Supply Chain Flexibility: Explore local sourcing options, use multiple smaller shipments, or look for backup suppliers in multiple regions.

By following these tips, importers and international trade businesses can navigate the uncertainties of global shipping more effectively. A proactive approach to potential issues saves money and keeps business flowing. 

How Customs Brokers Can Help 

For importers seeking new markets that allow them to avoid the region entirely, an experienced U.S. Customs Broker is critical. 

Opportunities to import from regional markets in the Western Hemisphere are expanding. From apparel to electronics, the manufacturing abilities of nations such as Mexico, Honduras, and Brazil continue to grow.  

Customs brokers are able to assist importers in:

  • Navigating new import regulations
  • Securing freight forwarding services
  • Customs bond purchasing 
  • ISF filing procedures
  • Proper tariff classification
  • Meeting Free Trade Agreement  (FTA) standards

The goal is to find solutions for your business that keep profit margins steady. Seeking secure shipping lanes and exploring new trade opportunities to diversify your supply chain is simply good business.

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Experts at USA Customs Clearance Provide Guidance You Can Rely On

The challenges posed by the current Red Sea shipping disruptions highlight the need for adaptive strategies and expert guidance in international trade. 

At USA Customs Clearance, we understand the complexities and nuances of these challenges and are committed to providing our clients with the most effective solutions to navigate through these turbulent times.

Let us help you find the most effective and efficient shipping alternatives for your business and call us at (855) 912-0406

Trust USA Customs Clearance to be your guide in navigating the complexities of international trade with confidence and ease.

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