Red Sea diversions in January 2024: landed cost, lead time and safety stock for strapping components

In December 2023 the question for buyers was whether ships would keep using the Suez route. By the end of January 2024 the answer was visible in the data, and the question had changed. Diversions around the Cape of Good Hope had become the working assumption for many services, and freight costs had moved sharply. For buyers of buckles, clips, seals and strap, that turns a logistics problem into a pricing and stock problem.

The first carrier announcements in mid-December 2023 raised the routing and open-order questions. This guide deals with what came next: how to compare quotations fairly and how much stock the longer route requires.

What the January figures showed

On 26 January 2024, UNCTAD estimated that weekly transits through the Suez Canal had fallen by 42% over the previous two months and that container-ship transits were 67% lower than a year earlier, according to AJOT’s report of the UNCTAD statement. Average container spot rates from Shanghai were up 122% compared with early December 2023, with Shanghai–Europe rates up 256%. Rates to the US West Coast had risen 162% even though that route does not use Suez. Low water levels were also constraining the Panama Canal, where total transits over the previous month were 36% below the level of a year earlier.

On time, consultancy Linerlytica had estimated in December 2023 that full diversion would lengthen container transit times by about 30% and add three to five weeks to round trips, with East Mediterranean services facing the longest detours, as Container News reported.

Gulf buyers sourcing by sea from eastern Mediterranean manufacturers were exposed too, because that route normally runs through Suez and the Red Sea.

Two consequences follow for packaging buyers. Freight had become a larger and less predictable part of the landed cost. And because ships spend longer on each voyage, more of your money is tied up in goods at sea.

Why freight hits closures and strap differently

Strapping components are not one kind of cargo. Steel seals, wire buckles and metal clips are dense: a container of them may reach its weight limit before it is full. Strap rolls, particularly PET and woven strap, take up space relative to their mass, so the volume of the container usually limits the load first.

That matters when freight rates move. A rate increase per container is spread over many more pieces of a dense metal closure than over rolls of strap. The same percentage freight increase can therefore change the landed price of strap rolls much more than the landed price of the closures that go with them.

The practical rule is to compare offers per usable unit:

• for closures, landed cost per thousand pieces;
• for strap, landed cost per metre or per roll of stated length;
• for a complete system, landed cost per joint, combining the strap length used per load with one closure.

Our UK and Ireland unit conversion guide shows how to keep pieces, cartons and price units consistent.

Put every quotation on the same basis

A low ex-works price and a delivered price cannot be compared directly, and in January 2024 the gap between them was moving week by week.

Delivery basis quoted	What the price includes	What you must add to compare
Ex works or free carrier	Goods made available at the seller’s premises or handed to your carrier	Export handling as agreed, sea freight, insurance, destination charges, duties and inland delivery
Cost and freight or cost, insurance and freight to a port	Main sea carriage to the named port	Destination port charges, clearance, duties and inland delivery; how freight surcharges are treated
Delivered at place	Delivery to the named place, import duties excluded	Duties and taxes, unloading if not included

Ask each supplier to state the named place precisely and whether freight surcharges are included, fixed or passed on. The international procurement guide explains how the chosen rule and the named place work together.

Time has a cost too

A longer transit means more stock in the pipeline and, to protect the same service level, more stock on the shelf. The reorder point for an item is, at its simplest, average daily consumption multiplied by the replenishment lead time, plus safety stock for variation. When transit grows by weeks, both parts rise, because schedules also become less reliable.

That extra stock costs money: cash tied up, warehouse space and the risk of holding sizes that stop selling. Set it against the alternatives:

Option	When it can make sense
Hold more safety stock of the same item	Steady demand, stable specification, adequate storage
Split orders, with a small urgent part by a faster route	One or two items would stop a line; most can wait
Source part of the demand from a route that avoids Suez	Another supplier offers the same accepted specification, with a fresh approval
Order larger, less frequent shipments	Freight per unit falls with fuller containers and storage is available

Any change of source must keep the specification. A closure from a different supplier is a new component until it has been evaluated with your strap and tool.

Quote validity in a moving market

With freight changing quickly, set out in the RFQ how long you need the price to hold, which elements may change, and how. Separate the component price from freight so that you can see which part moved. Agree the date on which the freight element is fixed, for example at booking. These terms protect both sides from surprises and make offers comparable.

Planning the next order

List the steel strapping seals, galvanized wire buckles, sheet metal clips and strap you depend on, with annual usage and destination, and send them through the enquiry page. Ask for the delivery basis and named place you want to compare, so that YAKU’s quotation can be set beside others on the same footing.