Crisis in the Red Sea: A Survival Guide for BCOs and Shippers
In recent months, various shipping vessels carrying thousands of containers have been openly attacked by Houthi rebels as they traveled through the Red Sea shipping lanes. The attacks have continued throughout the holidays despite the presence of a US-led military force in place to protect commercial vessels. Aggression has been thwarted, but the threat to container ships remains real. Many big shipping lines like Maersk and MSC have made the difficult decision to suspend operations or reroute their vessels away from the Red Sea due to escalating geopolitical tensions and security threats.
Effects of the Red Sea Conflict on Shipping Containers
Shipping lines are responding to mitigate the circumstances. They are tightening up free time to reduce equipment shortages. This means shippers are more likely to accrue per diem charges because it will take longer to return empty containers to Asia. Shipping lines are also routing eastbound cargo through west coast ports meaning shippers must then use rail to deliver containers to their distribution centers across the country. The extra time it takes may delay the return of the container and result in per diem.
How to Survive the Crisis
- Increase Visibility. Now more than ever, customers must have accurate visibility of their freight. As events unfold daily in the Red Sea region, you can eliminate surprises if you can check the status of your shipping containers and the important milestones to inform their ETAs. AV Logistics offers Coreviz, a proprietary supply chain visibility platform with industry-leading accuracy that provides a sense of control in a volatile environment. The platform tracks most-wanted milestones and offers on-demand reporting of container status. While you may not be able to control when the ship gets into port, you can view an accurate picture of when it does and understand what will happen next simply by logging into Coreviz.
- Employ Demurrage Management. As shipping lines shorten their free time for containers at the port, shippers must reduce their shipment dwell time. One way to do it is through demurrage management, for example, by moving your shipping containers at port to a more efficient storage area to avoid demurrage charges. We have relationships with more than 1,500 partner carriers and drayage specialists, as well as storage facilities and container yards that can provide safe refuge for your containers as they wait for the next leg of their journey.
- Monitor Per Diem Management. Your container’s contracted return date is unaffected by on-the-water delays. In other words, equipment must be returned on time, despite unavoidable delays, unless they are renegotiated. Otherwise, the owner or lessor of the container will assess per diem. We monitor our customers’ shipping containers and find ways to reduce their per diem by returning equipment through collaborative solutions with our supply chain partners. We also offer an industry-leading per diem reconciliation tool, which slashes the time it takes to submit, verify, process, and pay invoices for per diem charges.
- Consider Drayage Management. With Red Sea shipping routes closed, rerouted cargo may arrive at a different port than expected. You may need drayage to the rail or cross country to the distribution center. We are drayage management specialists who approach such challenges proactively by helping you find the resources you need to get your shipping containers where they need to go.
- Explore Chassis Management. Delays in port arrival times can compromise chassis availability and bottleneck your drayage. The time to arrange chassis to help you through logistics entanglements is before they occur. Chassis solutions include dedicated chassis, leasing, and drawing from a pool. Being proactive about your chassis needs means being prepared when the unexpected happens!