Europe stockpiling Chinese goods before Spring Festival, Chinese ships are popular in the Red Sea crisis

Deliveries of the important Christmas business in the West have been completed in the autumn. Right now, shoppers around the world are preparing for Chinese New Year." Swiss "Neue Zurcher Zeitung" said on the 10th that during the Spring Festival, many factories in Chinawill close for a long time, so Western traders and retailers have to fill their warehouses ahead of schedule. Capacity is scarce as most container shipping companies now route around Africa. Logistics experts have warned of bottlenecks in the coming weeks.
Chinese flag ships are welcomed
The current crisis in the Red Sea has had a huge impact on Hapag-Lloyd. In an interview with @Aoki in Germany, Nils Haupt, press officer of the German Hapag-Lloyd Group, said that since December 18 last year, the company's diverted ships between Europe and China have been completely redirected to bypass Africa and have been waiting for the crisis to clear up. For now, Hapag-Lloyd continues to avoid the Suez Canal and continues to classify such situations as dangerous. The company will review the situation on a daily basis and make its next decision on Monday.
In response to reports that Hapag-Lloyd has chartered a 3,400TEU Chinese container ship for its MD2 route. He said it was "true". The reason is, "We need additional capacity and have chartered the ship." But he did not say whether the charter of a Chinese container ship was related to security. At present, of the five major shipping groups, only China's COSCO Shipping still transports through the Red Sea. Many shipping companies have imported Chinese ships to avoid armed attacks.
Detour to Africa
However, very few foreign shipping companies have access to Chinese vessels. Most of the big shipping groups have already started circling the Cape of Good Hope, a route that will take an additional seven to 20 days. Logistics service provider Project44 found that 160 vessels have now been diverted, leaving only 28 remaining.

This means that four of the world's largest container shipping companies are extending delivery times and increasing fuel consumption. Together they account for 53 per cent of freight traffic. Denmark's Maersk said it had diverted four of its five container ships stranded in the Red Sea back to the Suez Canal and started a long voyage around Africa to avoid the risk of an attack. Maersk made a brief attempt to resume Red Sea operations after suspending them a week ago.

Germany Today logistics website reported on the 9th that despite the increased risk, some ships are continuing to sail as planned. During the week of December 17-24, 66 ships passed through the Suez Canal. For the week of December 24-31, the number of ships was significantly lower, at 33. At present, there are only 6.6 ships per day. Routes from Southeast Asia to Europe have been particularly affected by delays so far. Ships on the route are expected to arrive an average of eight days later than planned. Delays of up to four days are expected on flights between China and Europe.
At the same time, the Suez Canal is likely to be open again, allowing faster transport of goods. Another option is to use shipping companies that still sail through the Suez Canal - in this case mainly smaller shipping companies. According to UBS, unless more ships are used, longer travel times can lead to a 25% reduction in transport capacity on routes. If the customer does not want to wait, they can use air freight instead. But even then, costs would rise sharply. These interruptions come at an inopportune time.

Global freight rates soar

"Houthi armed attacks led to a spike in global freight," the German "Business Daily" said on the 8th, according to the Shanghai Container Freight Index (SCFI), in just four weeks, the global average freight rose 60%, reaching $1,759 per standard container. Rates have increased by more than 80% since February 2023. The surcharge particularly affects European importers from the Far East. For example, someone who booked a container from China to Europe with shipping company DSV in mid-October paid €562. The price at the end of December was 2,694 euros.
In addition, oil supplies from the Middle East have been affected. On December 18th BP announced it would stop shipping in the Red Sea, further driving up costs. It also makes Marine diesel more expensive.
Freight will not fall before the end of January, "the German transport newspaper said on the 8th, due to the Red Sea crisis, shipping rates continue to rise. Sea-Intelligence, a Danish market research firm, expects capacity bottlenecks to peak in the next two weeks.
But as with delivery difficulties during the pandemic, expected capacity bottlenecks are driving up the share prices of affected shipping companies. Maersk's share price has risen 20 per cent since the start of December, while Hapag-Lloyd's is even up 24 per cent. Kuhne + Nagel, the leading container shipping company, also achieved 17% growth.

The warehouse must be filled before Chinese New Year
"If this continues, it will once again have a serious impact on the global supply chain," warned Otto Schacht, a consultant and board member at Kuhne + Nagel, the world's largest shipping agency. "If so many services were routed around Africa, global capacity could fall by 22 to 27 per cent." Mike DeAngelis, director of supply chain specialist Fourkites, said, "Especially in high-value and time-critical shipments, such as designer fashion and certain electronics, some of which may be diverted from sea to air in a short period of time."
Geertz, a department manager of a company engaged in Sino-European trade in Hamburg, Germany, told Aoki on the 10th that they increased orders before the Chinese Lunar New Year, mainly clothing, toys, food and other daily necessities. The goods are now on their way to Germany. A few days ago, the shipping company had informed them that due to the crisis in the Red Sea, the ship had to make a detour to Africa and had to increase the cost. Now all sides must bear the price increase. Their biggest worry now is whether the shipment will continue to be delayed. The shelves of businesses will be empty.