Pirates make plywood shipping price hike

Tuesday 23 January 2024. – Three years ago, in March 2021, the container vessel Ever Given got stuck in the Suez Canal. The traffic was blocked for six days, and the main material vein from Asia to Europe was disturbed for several months. Now, the same route is crippled again.

Since mid-December 2023, Houthi rebels have targeted civilian vessels passing by the Red Sea. The Gaza conflict is 100 days old but shows no signs of settlement. On the contrary, escalation is a real threat. The British and US armies are striking Houthi bases in Yemen.

After a period of container rates “normalizing” post-pandemic and its aftermath, we are again in a situation where freight prices soar. In less than one month, the container price from Shanghai to Rotterdam has tripled, reaching soon $5000 per 40” container. Avoiding the hassle in the Red Sea means going around the Cape of Good Hope. It makes the trip one-third longer in time and distance.

In 2023, China shipped roughly 1.6 million cubic meters of hardwood plywood to Europe with an average price a bit over $400/m3. If container prices keep climbing up, soon sea freights will represent one-fourth of the imported price in European ports, in contrast to less than 10% in 2023.

In the 2020s, ocean freights resemble fast fashion in how quickly they change, with the exception that fashion is predictable with seasonal changes, whereas freight rates change with unpredictable world events. Let’s see what comes next after the Pirates of the Red Sea.