Soaring shipping rates are not guaranteed profits; high freight costs may backfire on global trade demand

Golden Ten Data reported on March 4 that Ben Slupecki from Morningstar stated that the turmoil in the Middle East is impacting global supply chains, as approximately 10% of global maritime trade relies on the Suez Canal. He added that ships are rerouting around Africa, which on average adds 10 days of delay and increases costs. "Supply chains are becoming slower and more expensive, and as consumers begin to personally feel the economic pressure brought by the conflict, the situation faced by European leaders becomes even more severe." Although shipping companies typically hedge higher costs through emergency contract clauses, the real benefit comes from pricing power. When supply is limited, freight rates rise, and higher prices drive profit growth. However, Slupecki pointed out: "These high prices also suppress demand, which means it's not the 'big money-making' opportunity people imagine."