No such luck.
As head of ocean freight for the Americas at Rhenus Logistics, a company based in Germany, Loomis spends her days negotiating with international shipping carriers on behalf of clients moving products and parts around the globe. Over the past few months, she has watched cargo prices soar as a series of disturbances have roiled the seas.
Late last year, Houthi rebels in Yemen began firing on ships entering the Red Sea en route to the Suez Canal, a vital artery for vessels moving between Asia, Europe and the East Coast of the United States. That prompted ships to avoid the waterway, instead moving the long way around Africa, lengthening their journeys by as much as two weeks.
Then, a severe drought in Central America dropped water levels in the Panama Canal, forcing authorities to limit the number of ships passing through that crucial conduit for international trade.
In recent weeks, dockworkers have threatened to strike on the East and Gulf coasts of the United States, while longshore workers at German ports have halted shifts in pursuit of better pay. Rail workers in Canada are poised to walk off the job, imperiling cargo moving across North America and threatening backups at major ports like Vancouver, British Columbia. The intensifying upheaval in shipping is prompting carriers to lift rates while raising the specter of waterborne gridlock that could again threaten retailers with product shortages during the make-or-break holiday shopping season. The disruption could also exacerbate inflation, a source of economic anxiety animating the U.S. presidential election. If the supply chain disturbances of the pandemic proved anything, it was this: Trouble in any one place tends to ripple out widely.
A container full of chemicals that arrives late to its destination spells delayed production for factories waiting for those ingredients. Ships jammed at ports wreak havoc on the flow of goods, clogging warehouses and putting pressure on the trucking and rail industries.
“I’m lovingly calling the market now ‘COVID junior,’ because in a lot of ways we’re right back to where we were during the pandemic,” Loomis said. “It’s all happening again.”
Since October, the cost of moving a 40-foot shipping container from China to Europe has increased to about $7,000, from an average of roughly $1,200, according to data compiled by Xeneta, a cargo analytics company based in Norway. That is well below the $15,000 peak reached in late 2021, when supply chain disruptions were at their worst, but it is about five times the prices that prevailed for the years leading up to the pandemic.
Rates to ship goods across the Pacific have multiplied by a similar magnitude. It now costs more than $6,700 to transport a 40-foot container from Shanghai to Los Angeles and nearly $8,000 for Shanghai to New York. As recently as December, those costs were near $2,000.
“We haven’t seen the peak yet,” said Peter Sand, Xeneta’s chief analyst.
Importers relying on shipping bemoan the return of another source of distress they suffered during the pandemic: carriers frequently canceling confirmed bookings, while demanding special handling charges and premium service fees as the requirement for getting containers on vessels.
“Everything is a fight to get containers,” said David Reich, whose Chicago company, MSRF, assembles gift baskets for Walmart and other giant chains. “It’s frustrating.”
Alarmed by the growing threats to sea transportation, Reich is accelerating plans to amass goods for the holiday season. He is pressing his suppliers in China to make his packaging for food items faster, anticipating delays in shipping.
Reich has contracts with two ocean carriers to move four containers per week from China to Chicago at prices below $5,000. Yet he was recently informed that the carriers were imposing escalating “peak season surcharges” that would add as much as $2,400 per container, he said.
And even at those prices, the carriers often say they have no space on their vessels, he complained. He fears he will have to resort to booking on the so-called spot market, where prices fluctuate, with rates now reaching $8,000.
In an emailed statement, the World Shipping Council, an industry trade association, said “spot rates reflect demand and supply in a competitive, global market, and the large majority of container traffic moves under rates negotiated through long-term contracts.”
Experts challenge that assertion, noting that container shipping is characterized by a dearth of competition on major routes, allowing carriers to raise prices substantially when the system is strained.
Three primary alliances of carriers control 95% of the container traffic between Asia and Europe and more than 90% between Asia and the East Coast of the United States, according to the International Transport Forum, an intergovernmental organization in Paris with 69 member countries including China and the United States.
During the worst disruptions of the pandemic, when extreme delays and product shortages prompted retailers to pay carriers as much as $28,000 to move single containers across the Pacific, the industry logged record profits.
New Balance, the athletic shoe brand, is cushioned in part by its reliance on factories in the United States as well as its contracts with carriers that lock in prices. Still, in some instances, the company has been forced to pay spot market rates that have risen sharply, “similar to the peak years of the pandemic — more than 40 percent month over month,” Dave Wheeler, the chief operating officer, said in an email.
Carriers have been canceling some scheduled sailings, reducing capacity, Wheeler added. “We do see a storm brewing in 2024 for reliability and pricing risks,” Wheeler said.
The most immediate cause of the recent increase in shipping prices is the targeting of vessels by the Houthis, who are acting in support of Palestinians under assault by Israeli forces.
That threat appears to be escalating, as the Iranian-backed Houthi rebels increase the frequency of their attacks, supplementing missile strikes with sea drones — essentially waterborne boats loaded with explosives and commanded by remote control.
In recent weeks, such assaults have sunk two vessels, including a Greek-owned ship carrying coal.
With container traffic through the Suez Canal dropping to one-tenth of its usual flow, most ships moving between Asia and Europe now circumnavigate Africa, which entails burning more fuel.
At the same time, carriers have concentrated their fleets on the most lucrative routes, those connecting destinations like Shanghai and the Dutch port of Rotterdam, Europe’s busiest. That has forced cargo bound for other places to stop for loading and reloading at major hubs known as transshipment ports.
The largest such ports, including Singapore and the Sri Lankan capital, Colombo, are now overwhelmed with incoming vessels. Ships must wait at anchor for as long as a week before pulling up to the docks.
Given the disruptions and additional costs, some increase in shipping rates is unavoidable. But those dependent on the industry argue that the carriers are increasing prices beyond the recovery of their own additional costs.
“The carriers learned a very valuable lesson during the pandemic,” Loomis said. “They will manipulate capacity, and they will jack up freight rates.”
The greatest concern is that floating jams could become a self-fulfilling prophecy. As importers absorb the reality of increased shipping prices and port congestion, they are ordering early. That could result in a surge of incoming cargo at major ports like Los Angeles; Newark, New Jersey; and Savannah, Georgia, exceeding the capacity of trucking, railroads and warehouses.
The prospect of a rail strike in Canada is prompting cargo bound for Vancouver to divert to Southern California, the scene of the worst traffic jams during the pandemic disruptions.
In Tennessee, F9 Brands, an importer of cabinets and flooring products, has been increasing its orders in the face of longer delivery times, said Jason Delves, the company’s CEO.
The company brings cabinets from factories in Vietnam, Thailand and Malaysia to the port of Savannah and then to its warehouses in Tennessee via rail and truck. Typically, that journey takes six weeks. “Now, you’re bumping it up to over eight weeks,” Delves said.
Adding to the concern is the reality that no one knows how long the latest disruption will last or how it will play out.
The Panama Canal restrictions have mostly been lifted as the rainy season replenishes the supply of water. But climate change is increasing the risks of future droughts.
The consequences of the pandemic were difficult enough to grasp, with great miscalculations over the impacts on demand for factory goods. But everyone understood that pandemics end eventually.
The Houthi strikes and the effects on the Suez Canal, on the other hand, involve enormous geopolitical variables that make forecasting difficult.
“It’s a very complex situation, and it appears open-ended,” Sand said. “There is no clear solution in sight.”
This article originally appeared in The New York Times.