Global Supply Chain – Geopolitics
Q4 2024 Market Update
SUMMARY: Red Sea conflict continues driving lengthy re-routings, adding inefficiency and cost
Ship attacks in the Red Sea Gulf of Aden continue to limit Suez Canal access. Since December 15, 2023, most maritime carriers have announced they will avoid the Suez Canal following a sequence of attacks on container vessels launched from a part of Yemen. Most vessels now travel around the Cape of Good Hope, adding an average 14 days to transit time. This longer transit time has a significant impact, not just to trade that moves via the Red Sea, but across all global trade lanes and it is estimated that 6 to 9 percent of all global capacity is consumed by the demands of this alternative routing. This situation continues to have a large influence on the ocean shipping market, draining capacity, impacting shipping and equipment utilization efficiency, and generally increasing ocean freight rates, which were triple prior year levels, settling back at the end of Q3 to over twice the container rates of a year ago. CH Robinson, Google News, Drewry, DHL Migration of manufacturing away from China for products imported to the U.S. is driven by a combination of geopolitical tensions, economic factors, supply chain resilience needs, and corporate responsibility goals. By mid-2024 , a majority of ACR’s for-sale products were made in countries other than China and over the preceding twelve months, the company has reduced the proportion of its manufactured products for sale imported from China by over 1500 basis points, accomplishments that demonstrate determination to mitigate geo-political supply chain risk and a commitment made by ACR to protect the interests of our customer.
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