[Freight Weekly] Global Shipping Costs Out of Control

📈Global shipping costs hit higher costs associated with several factors: climate change, the Red Sea crisis, Panama Canal water woes📈

Shipping costs around the world are reaching new heights as several factors continue to complicate the international trade environment: Climate change and net-zero targets, Houthi militants and the Red Sea crisis, Panama Canal levels:

• The Drewry World Container Index reports that international costs per 40-foot container are $5,901 at the time of this writing (July 11, 2024). That is a whopping 297 percent increase compared to this time last year.

• One of the leading factors for higher costs, reports Deutsche Welle, is the ongoing crisis in the Red Sea, where Yemeni Houthi militants attack all sorts of civilian vessels in what they say is a show of solidarity with the Palestinians and the Hamas militants currently fighting IDF forces.

• Red Sea shipping has dropped significantly, forcing vessels to transit around the Cape of Good Hope in South Africa to avoid molestation from the Iran-backed militant groups impacting the area — this includes the Gulf of Aden, the Persian Gulf, and the Arabian Sea. Piracy is up, too.

• International trade is interconnected despite protectionism, and the dry season in the Panama Canal contributes to an increased container cost.

• The Panama Canal Authority announced that it is considering constructing a new reservoir to resolve its ongoing water level crisis.

• With assistance from the U.S. Army Corps of Engineers, the canal devised a plan to dam the Indio River and divert water into Gatun Lake.

Bottom line: Shipping is expensive these days. International events and crises—especially matters that are resolvable through diplomacy—will continue to see a climb in per-container costs. Something has to give soon, though. What will it be?

MORE CONTEXT: Climate-driven ice breakage is shortening shipping season in Northwest Passage: Study

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📈 BY THE NUMBERS

⛽ Diesel: $3.865 gal (⬆️from $3.813 last week) - EIA

✈️ Air Cargo Index (May ‘24): 169.1 (⬇️from 175.8 in April ‘24) - FRED

🚢 Global Container Index: $4,988.00 (⬆️from $4,508.00 on 7/4) - Freightos

📰OTHER NEWS IN FREIGHT📰

😮Port of LA completes Pier 400 rail expansion: The project added five rail tracks to the on-dock yard at the APM Terminals facility for containerized cargo. It cost $73 million. Read about the new expansion here.

💰Mexico and USA levy new tariff challenge against Chinese steel: Reuters is reporting that the United States and Mexico are teaming up to crack down on China for circumventing tariffs on steel and aluminum. …Section 232 tariffs…

A DIFFERENT PERSPECTIVE: John Stossel on Tariffs for Reason…

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