Red Sea Freight Problems Will Hit Consumers in 6-9 Months

The challenges facing the world of trade have unfortunately become white noise. Seafarers have been taken hostage, some have lost their lives in vessel attacks, and ships have sunk to the bottom of the ocean. Yet the threat to the freedom of navigation and the ramifications of these Red Sea attacks have become part of the doom-and-gloom background noise in the world of news. Everyday consumers have no idea what’s going on unless they read trade news. The waves of uncertainty and the hairballs of congestion as a result of the Red Sea diversions are growing. Egypt continues to lose millions and is embroiled in high inflation. What is happening now can add to geopolitical instability and eventually hit pocketbooks.

Data released earlier this week for May shows that revenues of the Suez Canal dropped by 64.3% to approximately $337.8 million. In May 2023, $648 million was recorded. Vessels traversing the canal in May also dropped to 1,111, vastly fewer than the 2,396 that crossed during a similar period last year. Cargo volume passing through the Suez Canal dropped by 68.5% last month to approximately 44.9 million tons. In May 2023, total cargo tonnage was 142.9 million tons. Egypt is a key ally for peace in the Middle East. You’d think the economic ramifications of this would be a bigger story. It is not.

Only when the transitory inflation hits consumers between six and nine months from now will people raise an eyebrow — OR if we see a 20K handle on container rates.