Major shipping giants to implement new surcharges on sea freight from June’24

June’24 onwards, shipping cargoes to the USA and Europe is going to incur significantly higher charges as major shipping companies are planning to implement new surcharges in response to changes in shipping routes. Hapag Lloyd of Germany will introduce a Peak Season Surcharge of $1,000 per container on shipments from the Indian Subcontinent and the Middle East to the North America West Coast, and $500 per container from India, Bangladesh, and Sri Lanka to the US East Coast and Gulf Coast, effective from June 17. Denmark's Maersk will impose a $540 surcharge per TEU for shipments from India to the US and Canada.

Additionally, France's CMA-CGM will apply a $500 surcharge per container from parts of the Indian Subcontinent, the Middle East Gulf, Red Sea, and Egypt to the US East Coast and Gulf starting June 14.

The uptick in the shipping charges is believed to set off the increased costs associated with rerouting their vessels around the Cape of Good Hope instead of through the Suez Canal. This change in routing was necessitated by security concerns following attacks on ships in the Suez region by Houthi terrorists.

The Suez Canal, which typically sees about 19,000 ships passing through annually, is a critical shortcut between the Red Sea and the Mediterranean Sea. The alternative route through the Cape of Good Hope significantly increases the journey by approximately 6,000 nautical miles and doubles the travel time, leading to considerably higher fuel costs.

Recently, the ocean freight rates surged by up to 30% from the Far East to North Europe and the US since the onset of April, with similar trends observed towards the Mediterranean and US East Coast.

The early onset of peak season in 2024, along with a record 9.2% increase in demand during the first quarter compared to the same period in 2023, has added further pressure on shipping capacity. This surge in demand coincides with US companies aiming to rebuild inventories in new warehouses to safeguard against potential supply chain disruptions to mitigate the risks associated with late deliveries over the concerns of holding excess stock.