Houthi rebels effectively closed the Suez Canal to most commercial shipping last fall with hijackings and attacks. Initial re-routings around the Cape of Good Hope added over ten days to sailings, but global shipping networks began buckling in May as orders increased ahead of the peak shipping season.

These disruptions have complicated logistics for retail and manufactured goods. Importers and exporters are concerned that congestion will worsen as demand rises in the coming months, potentially pushing freight rates back to pandemic-era highs. During the pandemic, spot-market prices for shipping a 40-foot container surged past $20,000.

According to Freightos, the average worldwide cost of shipping a 40-foot container reached $4,119 in mid-June, more than triple last year’s rate and the highest since September 2022.

Michael Murray, who runs DeSales Trading in Burlington, N.C., noted, “We haven’t seen $20,000 rates like during the pandemic, but rates from Asia to the U.S. East Coast are around $7,000 per box, compared to the usual $3,500. Getting stuck with high freight costs is a major concern.”

Additional supply-chain challenges are compounding these issues. Some U.S. importers are accelerating orders ahead of new tariffs on Chinese goods. Due to drought, the Panama Canal has restricted ship movements, and U.S. retailers and manufacturers are worried about potential dockworker strikes at East Coast and Gulf Coast ports.

Freight specialists warn that congestion could worsen if more importers bring in goods early to avoid higher costs and delays later in the year.

“We’re seeing a surge in cargo as shippers book more containers earlier,” said Jonathan Roach, a container shipping analyst at London-based Braemer. “This is to front-load inventory and mitigate longer transit times and potential delays. If congestion worsens, we could see even more front-loaded cargo bookings, exacerbating the situation.”

The impact on importers’ earnings is already evident. Mark Webb, CFO of J. Jill, noted on an earnings call that the apparel retailer used expensive airfreight to rush items for Mother’s Day. British retailer DFS Furniture cut its profit outlook by half due to Red Sea routing issues, which delayed $18 million worth of goods.

Ports like Barcelona and Antwerp are also heavily congested, as ships bypass Mediterranean hubs and head to Europe’s Atlantic coast. The cost of leasing sea containers has surged, with prices in Singapore up 26% since October and rates for boxes from Shanghai to Los Angeles nearly doubling.

LA Foods is working to stay ahead of the situation at home as world events evolve. Larry Schwartz, Director of Business Development for LA Foods, believes trade flows and freight rates will likely normalize once the Gaza conflict is resolved and Red Sea shipping resumes.

“Over the last 30 years, we’ve witnessed supply chain disruptions of nearly every kind,” Schwartz said. “That’s why we began running protocols last fall in anticipation of shipping problems; our customers expect us to get them what they need, when they need it, no matter what’s happening globally.”