Mitigating Operational Risks Amidst Peak Shipping Season Delays

A container ship making it's way across the Red Sea.

As the peak shipping season approaches, ocean carriers are grappling with record low shipping volumes through the Red Sea, prompting reroutes and extended transit times. This article explores the current situation and offers strategies for supply chain directors to navigate these challenges.

Navigating Unprecedented Shipping Challenges

The shipping industry is currently facing an unprecedented challenge. Ocean carriers are dealing with record low shipping volumes through the Red Sea, leading to the rerouting of vessels around Africa’s Cape of Good Hope. This situation is expected to persist well into the peak shipping season, which begins in August.

According to supply chain visibility platform Project 44, passages through the Suez Canal have plummeted by 80% between May 2023 and May 2024. This drastic reduction is attributed to Houthi rebel attacks, which have effectively halted shipping through the region for months. As a result, carriers are opting for longer reroutes, adding a median of 10-14 days of transit time for vessels traveling from China to Europe, Southeast Asia to Europe, and Southeast Asia to the U.S. East Coast.

The ‘New Normal’ in Transit Times

Project 44’s report, published on June 21, suggests that these extended transit times represent the ‘new normal’ as carriers continue to avoid the Red Sea. This trend is expected to continue during the peak shipping season, which spans from August to October. During this period, consumer spending typically increases in anticipation of the holiday season.

While lessening drought conditions at the Panama Canal have provided some relief for U.S. carriers seeking alternative routes, Europe continues to bear the brunt of the impact, with vessels unable to pass through the Suez Canal.

Escalating Threats and Their Impact

The situation is further complicated by escalating Houthi rebel attacks. The most recent assault occurred on June 23 on the edge of the Gulf of Aden, well outside the area of previous incidents. The MV Tutor, a coal carrier flying the Liberian flag, was hit with two missiles on June 12, marking the second ship the group has sunk in the Red Sea.

Strategies for Supply Chain Directors

In light of these challenges, supply chain directors must adopt strategies to mitigate operational risks. These may include diversifying shipping routes, enhancing supply chain visibility, and preparing for potential disruptions. By doing so, businesses can better navigate the current landscape and ensure the timely delivery of goods during the peak shipping season.