SHIPPING COSTS TO RISE DUE TO RED SEA RE-ROUTING

The cost of international shipping has shot up as businesses prepare to ship goods for the festive season far earlier than usual, in a sign of the far-reaching effects of disruption from attacks in the Red Sea.

Kenya Ships Agents Association (KSAA) on Wednesday said importers should expect higher charges from this week as stakeholders assess the increasing insecurity from Yemen Houthis’ claim of fresh Red Sea attacks on British and American ships.

The average cost of shipping a 40ft container between the Far East and northern Europe at short notice, the figure that is most sensitive to market prices, hit $4,343 last week, roughly three times higher than the same period last year, according to freight market tracker Xeneta.

Prices have not yet surpassed the peak seen immediately after Yemen’s Houthi militant group began targeting vessels in November. But they are rebounding during a usually quiet period for shipping in the spring months.

Typically the peak period occurs between late summer and autumn, when retailers start importing goods for the November Black Friday sales and Christmas shopping season.

“The peak season has been brought forward,” said Michael Aldwell, head of sea logistics at Kuehne + Nagel, one of the large freight forwarders that handles goods and sets the price of shipping for retailers.

“Despite efforts to normalise freight rates following events such as the Covid-19 pandemic and the Russia-Ukraine War, the ongoing attacks by Houthi Rebels present a persistent challenge.”

"Major shipping lines, including those represented by KSAA, are responding by rerouting vessels around the Cape of Good Hope, a costly alternative that directly impacts the business community and consumers in East Africa,” Says KSAA Chief Executive Officer Juma Ali Tellah

The Red Sea has remained a biggest worry by shippers resulting to the rerouting of vessels to take a longest route via Southern of Africa while some vessels are attempting to mask their positions by pinging on other locations, as a safety precaution when entering the Yemen Coastline.

DP WORLD INKS A 30 YEAR CONCESSION AT DARESALAAM PORT

 

The Dubai-headquartered logistics major and global port operator, DP World, inked a 30-year concession agreement on Sunday with the Tanzania Ports Authority (TPA) to operate and modernize the multi-purpose Dar es Salaam port, as part of its strategy to extend its footprint in Africa.

Agreement details

The agreement aims to optimize the port’s operations and improve transport and logistics services across Tanzania and the region.

As part of the first phase of DP World’s multi-phase investment plan, the company will channel more than $250 million to upgrade the port. Meanwhile, the total investment during the concession period could increase to $1 billion, including potential investments in temperature-controlled storage to enhance Tanzania’s agricultural sector, as well as greater connections to rail-linked logistics.

Furthermore, DP World has unveiled plans to invest in the development of a special economic zone together with the country’s broader port sector, which will bolster Tanzania’s role in facilitating global trade.

Regional impact

The port development project will connect to the sub-Saharan Africa region through a network of roads, highways, railways, and dedicated freight corridors and ports, supporting the rising demand for logistics solutions across Africa and connecting businesses across the region to global markets.

Under the agreement, DP World will collaborate with the TPA and the port’s existing stakeholders to facilitate faster cargo clearing and improved cargo planning, further strengthening Dar es Salaam’s position as the maritime gateway for green energy metals from the copper belt in Southern-Central Africa.

Moreover, the planned developments will enhance the port’s overall operational efficiency. This, in turn, will attract more shipping lines and bigger ships to Dar es Salaam and ultimately reduce ocean freight costs for Tanzanian importers and exporters.

Currently, the company manages nearly 9% of the world’s handling capacity, positioning itself among the top five global port operators.