ECONOMYNEXT – Sri Lanka’s exporters are seeing steep increases in freight rates on West-bound rates which industry analysts warn will spread to the East as ships and containers are delayed while passing around Africa to avoid Houthi attacks in the Red Sea.
The sailing time to exports to the EU and to the USA East Coast have increased by around 12 to 14 days,” Yohan Lawrence, Director General of Sri Lanka’s Joint Apparel Association Forum told EconomyNext as ship by-pass the Suez canal.
Rates to some European ports have increased by as much as 2000 to 3,000 US dollars per 20-foot container, he said, which has resulted in doubling of freight costs in some cases.
Import containers from East Asia had not gone up as much, so far.
From Shanghai, a 40-foot container has gone up to around 1500 to 1,600 US dollars from around 900 to 1,000, says Viraj Perera, Managing Director of Reliance Agro Pvt Ltd, a company dealing in agricultural machinery.
“Container availability has also got tighter,” he said.
Freight rates are still lower from the peaks seen when the US Fed was firing a global inflation bubble.
At the peak rates were around 8000 – 10,000 US dollar per 40-foot container.
As ships are strung along around Africa, it will take longer for them to turn around and return to East Asia reducing ship calls and also containers, which will remain at sea for longer.
“Going around Africa has increased the time to three weeks, when the return journey is counted,” Rohan Masakorala, Chief Executive of Colombo-based Shippers’ Academy said.
“Both the supply of containers and availability of ships will reduce, affecting Eastern routes as well.”
An apparel exporter who was trying to complete deliveries for the summer season, where deadlines are just ending, said they were combining shipments in January as ship calls reduce to Colombo and try to meet deadlines.
“If we don’t meet the deadlines we will have to airfreight shipments,” he explained. “So far I have managed.”
Sri Lanka’s Colombo Port has seen higher transshipment volumes as ships going around the Cape of Good Hope unload containers destined to Middle Eastern ports. (Colombo/Jan16/2023)