Yan Yi-tsai: Red Sea Crisis 2.0 is Unfolding, Shipping Facing Capacity Crunch

Taipei, May 22 (CNA). Yan Yi-tsai, General Manager of T.H.I. Group, stated today that with the ongoing US-Iran conflict, the previously predicted 'Red Sea Crisis 2.0' is currently unfolding. Problems such as detours, port congestion, and container shortages are real. Due to a sharp rise in oil prices and importers rushing to stock up, the traditional shipping peak season has arrived early. Freight rates in the second quarter are strong, and 'all routes will be fully booked until mid-June,' with the third-quarter peak season also expected to be solid.

T.H.I. Group held an investor conference today, reporting a first-quarter consolidated revenue of NT$4.846 billion, with a net profit attributable to the parent company of NT$151 million and earnings per share (EPS) of NT$1.1, a decrease from the NT$2.02 EPS in the same period last year. The company stated that the global logistics market continued to see freight rate corrections in the first quarter, with prices on major routes declining year-on-year, though overall cargo volume maintained growth.

In an interview today, Yan noted that the blockade of the Strait of Hormuz has caused the container industry to face detours, congestion, and container shortages. The 'Red Sea Crisis 2.0' he predicted is happening, and shipping companies are unable to adjust quickly enough, consuming available capacity.

He explained that insurance companies are refusing coverage due to war risks, forcing shipping companies to withdraw from sensitive waters. Vessels originally serving Middle Eastern routes are failing to be redeployed, making it impossible to quickly support other popular routes like those to the US. Beyond the Middle East crisis, global capacity supply is being squeezed in other key regions, and 'long-distance detours mean empty containers cannot return.' Currently, major global hub ports are experiencing congestion and vessels waiting to berth; ports that previously required only 24 to 48 hours of waiting time now generally face delays of 3 to 5 days.

He believes another impact is the sharp rise in oil prices, which has fueled inflation and caused panic among importers. With the digestion of inventories in Europe and the US coming to an end, freight rates have surged, and the traditional peak season has shifted from July to now. Cargo volume from China to Africa has increased by over 50%, vessel deployment cannot keep up, and the US route shows no signs of weakness, with space almost requiring premiums.

The Shanghai Shipping Exchange released the latest Shanghai Containerized Freight Index (SCFI) today, showing a rebound for the fourth consecutive week. Yan stated that it has risen by 20% since the end of April, and there is no doubt that Q2 freight rates will be strong. 'Not only the US route, but all routes will be fully booked until mid-June,' he said, adding that while the third-quarter peak season will not be bad, attention must be paid to inflation.