Happy New Year and welcome to this, the first edition of Espace’s Industry Insights. For those not familiar I am Geoff Yates, Commercial Director at Espace with over 20 years in the industry, i’ll be posting every month with views and opinions of the shipping industry – essential to everyone who trades internationally.
When I originally drafted this post, my main focus was to be on elections in the UK, US, EU and India and with customs and policy changes due throughout this and coming years. However, there are more pressing world events which are and will be affecting us all significantly in the year ahead which need to be addressed first.
Throughout 2023, world shipping prices have fallen dramatically from their record Covid pandemic highs across air, sea and road. Many in the international trade spectrum predicted the end of year lows to continue until at least the second quarter of 2024. Recent events in the Red Sea though have brought about significant and rapid change.
In response to the Israeli-Gaza war, Iranian-backed Houthi rebels in Yemen have significantly stepped up a campaign against commercial shipping in the Bab-el-Mandeb strait resulting in all major shipping lines on the Asia-Europe trade lane avoiding the Red Sea – which allows access to Europe via the Suez Canal. Vessels are being diverted around the Cape of Good Hope (South Africa) adding around 6000 kms and 10-12 days to shipping.
Almost 12% of all global trade passes through the Suez Canal and the diversion is adding significant costs onto shipping prices to cover additional fuel and insurance premiums – and warnings of profiteering by some, as shipping lines look to recover from the battering they received in 2023.
There is expected to be disruption at major UK and European deep-water ports and potential capacity issues as vessels arrive behind schedule.
Away from the direct impact on shipping, costs are rising rapidly in the air too as traders look to change modes to guarantee transit times. There are also fears of higher fuel prices as the year progresses should the flow from the Arabian oil fields continue to be disrupted.
The situation in the Red Sea is changing rapidly and we urge you to keep in close contact with your shipping departments and freight forwarders.
2024 will bring with it a raft of changes on the domestic trading front too as we begin to adopt the UK’s vision of a world leading border documented in the Border Target Operating Model (BTOM). As early as the 31st January, health certificates will be needed for the first time for medium risk animal, plant and related products from the EU bringing an end to post-Brexit easements.
We will also get the first sight of the UKs Single Trade Window (STW) in 2024. Espace are registered for beta testing of the STW giving us sight of it sooner than most and an opportunity as a key cross-border player to change how it is used.
On a final note, just before Christmas, the UK Government announced they will be introducing their version of the EUs Carbon Border Adjustment Mechanism (CBAM) which is a levy to level carbon pricing for imports into the UK. Consultation on the CBAM will take place this year and roll-out is expected to happen in 2027. Reporting of CBAM could pose a significant administrative burden to businesses, and a raise in costs for anyone importing from the EU this year.
Our goal throughout this coming year is to keep you advised of all changes in as simple a format as possible. If you have any specific concerns, please contact your Espace freight account manager or myself directly on geoffyates@espaceglobalfreight.com
Have a great year!
Geoff