A screen grab captured from a video shows that cargo ship ‘Galaxy Leader’, co-owned by an Israeli company, being hijacked by Iran-backed Houthis from Yemen in the Red Sea on November 20, 2023. (Photo by Houthis Media Center / Handout /Anadolu via Getty Images)
Anadolu | Anadolu | Getty Images
The ripple effects of the Red Sea diversions have expanded into the energy markets and despite repeated attacks on Houthi rebels by the U.S. and allies, shipping experts say the crisis may linger for months and lead to a cargo container supply crunch.
“So far, it almost seems the Houthi attacks are just increasing,” said Bendik Folden Nyttingnes, a shipping analyst at Clarksons Securities.
In an email to clients, Honour Lane Shipping (HLS) said its carrier contacts are “informally” predicting the Red Sea situation will not be solved for at least six months, and could last up to a year. “If so, we expect the soaring freight rates and equipment shortage will continue till the third quarter,” it advised clients.
Earlier this week, Shell confirmed that its oil tankers are temporarily being rerouted around the Red Sea, with its CEO telling the Wall Street Journal that a 5-10% price impact is anticipated in the short-term.
Kpler’s ship tracking director Jean-Charles Gordon estimates that vessels managed or chartered by Shell that are being rerouted via the Cape of Good Hope can expect an approximate 10-day delay in their estimated time of arrival.
“As several product tanker operators are avoiding the area following the airstrikes on Friday, the longer transit times around the Cape of Good Hope could create a supply shortage of tonnage if the situation continues, which in line could push product tanker rates and stocks higher,” Nyttingnes said.
Torm , Hafnia, Stena Bulk, Hafnia, BP, Frontline, Equinor,Euronav are reportedly among the tanker operators and energy companies choosing to avoid the area following recent warnings. Companies including Tom, Hafnia, Scorpio Tankers and Ardmore would benefit if product tanker rates rose, Nyttingnes said.
These diversions are immediately eating into Egypt’s economy, with its GDP reliant on the Suez Canal, which it owns and operates. The country’s other significant source of revenue, travel, has been decimated because of the Israel-Hamas War.
“If Total Suez Canal tanker transits are over 8 million barrels per day, the losses to the Canal Authority are probably in the range of $5 to $7 million depending on the mix of tankers going through,” said Andy Lipow, president of Lipow Oil Associates.
This would be on top of the revenue lost by diverted container vessels which are required to pay between $500,000-$600,000 per transit. According to Kuehn + Nagel, 90% of container ship traffic bound for the Suez Canal has been rerouted.
50% of all Suez traffic could be rerouted
A drop of 40-50% in all vessel Suez crossings as a result of shipping diversions is possible, according to Ami Daniel, co-founder & CEO of Windward, which could create a situation similar to the Covid supply chain crunch for many retailers reliant on global supply chains.
Logistics CEOs have been warning CNBC that the vessel re-routings would result in container crunches. When vessels are late, the containers on those vessels will be late to be processed and reused again for exports.
Goetz Alebrand, head of ocean freight Americas for DHL Global Forwarding, has been warning about an upcoming container crunch for weeks. “More than 4 million containers (Twenty-Foot Equivalent Units) are bound for longer transit times and will not be ready in the Asia Pacific for the next loading,” he warned. “Considering a two-week delay in either direction it could mean that four million times of containers will be needed to have availability.”
The Asia to Europe route is the most impacted by delays. The ripple effect of this bleeds into the ability of European exports to move out at a fluid rate.
“Europe has felt the most impact from the situation in the Red Sea given it is the major trade route for goods coming from Asia,” said Stephen Schwarz, executive vice president of Wells Fargo global receivables and trade finance. “However, with more ships being diverted and taking alternative, longer routes to Europe, it is starting to impact global capacity. The delay of containers, reduced capacity, and longer transit times all influence global shipping costs which will start to impact U.S. companies the longer the situation in the Red Sea continues.”
Paolo Montrone, global head of trade for Kuehn + Nagel, said the container crunch situation currently unfolding will have a knock-on effect on European exports.
“We anticipate encountering challenges in European terminals as larger ships are expected to arrive outside of their scheduled times. This influx is likely to cause congestion and slowdowns at terminals and ports, subsequently affecting other services such as shipments from Europe to the USA.”
Companies with higher-value items and time-sensitive products are also shifting to the air. “Drawing from past experiences, we foresee an increase in the need for air freight services in the upcoming weeks,” said Montrone.
Alan Baer, CEO of OL USA, said he is expecting the container crunch to impact Asia as well.
“Recently carriers reduced the amount of free time on import containers to help expedite the return of equipment back to Asia,” said Baer. “However, given the longer transit times vessels are experiencing, the market may face a shortage of empties across Asia until sailings normalize.”
U.S. retailers say they are prepared
The delays of vessels during the pandemic had some retailers like Home Depot, Costco, and Walmart hiring charters to speed up deliveries.
Evelyn Fornes, Home Depot spokeswoman, said it is working with logistics carriers to find alternate routes to limit any impact from the Red Sea conflict.
“As a regular course of business, we always have plans in place for potential disruptions to any of our partners,” Fornes wrote in an email. “We have a large and diverse supply chain with a number of partners, so we’re accustomed to being flexible and agile when there are disruptions. This type of flexibility is what allowed us to adapt and move the unprecedented volumes during the pandemic, despite significant disruptions.”
“Target remains confident in our ability to get guests the products they want and need,” a Target spokesman said via email. “We leverage production and transportation partners across the globe, and the majority of our freight does not travel through the Suez Canal. For any freight that’s being routed around the Suez Canal, we’re working with shipping partners on alternative paths.”
While retailers are expressing confidence, Tesla, Volvo, and Michelin have recently said they have had to halt manufacturing. Ikea has warned of delays of product, as well as British retailer Next and Crocs.
Costco and Walmart did not respond to requests for comment.
East Coast freight rates soar
While freight rates for U.S. West Coast ports have yet to spike, freight rates for the East Coast and Gulf are up. U.S. East Coast rates are between $5,900-$6,700 for a forty-foot container, and rates for the Gulf are between $6,300-$6,900 a 40-foot container, according to Honour Lane.
To avoid delays and fees, some logistics companies are re-routing to the U.S. West Coast, which could result in higher rates eventually.
“U.S. West Coast space is also getting tight as a substantial number of boxes destined for U.S. East Coast /Gulf destinations are being re-routed through U.S. West Coast hubs,” wrote HLS. “Some big beneficial cargo owners like Walmart have proposed to increase their allocation to the U.S. West Coast and reduce allocation to U.S. East Coast.”
The rates for East Coast and Gulf Coast containers are expected to go up even more. In an advisory to clients Tuesday, MSC alerted of both general rate increases and peak season increases starting February 12 for import containers from the Middle East/Indian Sub-Continent to U.S. East Coast, Gulf Coast and San Juan.
Refrigerated containers called “Reefers” and dry containers, both 20-foot and 40-foot, will be charged a $2,200 peak season charge per container plus a $1,000 general rate increase (GRI) per container. This is on top of whatever container fee the shipper pays.
Some carriers are reportedly planning to deploy more capacity to West Coast for the next contract year, HLS says.
“As the rate difference and transit time difference between U.S. East Coast routings and U.S. West Coast routings are both increasing, the conditions are satisfied for carriers to launch premium services to guarantee space and equipment, which is not strange to us.”
The Port of Los Angeles announced on Tuesday, a total of 747,335 containers were processed in December. This marked the fifth consecutive month of year-over-year growth of the port. Even with its 2023 year handling of 8,634,497 Twenty-Foot Equivalent Units, it was around 13% less than in 2022.
Kubota came to this year’s CES with a sprawling display filled with electric equipment, hydrogen gensets, and an onslaught of commercial robots ready to mow, farm, dig, and build. If you weren’t impressed by Kubota’s display this year, you weren’t paying attention.
Kubota gave us a sneak peek of its KATR farm robot – itself a smaller, updated version of last year’s New Agri Concept – before the doors officially opened last week. Kubota’s robotic farm buddies promise to be able to quietly and autonomously haul stuff from one end of the farm to another, or pull carts and specialized implements along predetermined paths.
KATR uses self-leveling technology and active suspension to ensure its cargo deck stays level when working on the sort of uneven terrain found on farms or construction sites.
That doesn’t mean the New Agri Concept is dead, though. Agri Concept 2.0 debuted as an electric tractor concept offering AI-powered automation and a fully electric powertrain. The new version features a Lite Brite-style “grille” that it uses to communicate its current mode, direction, and other important information with the people it shares a job site with.
On the more practical side, Kubota showed off its KX38-4e Electric compact excavator. First shown in overseas markets in 2022, the KX38-4e Electric features a 49.2 kWh lithium-ion battery that’s good for up to five hours of continuous operation. More than enough to complete a typical day of work on a construction site when you factor out idle time.
An onboard DC fast charger means it can be quickly recharged between shifts, too. But when there’s no grid power on the site, charging can be a challenge. That’s why Kubota has hydrogen genset for zero-emission on-site power generation.
Kubota electric excavator.Kubota Denyo hydrogen genset.
Looked at individually, each of the new electric Kubota products on display might be impressive. The real magic, though, is in the way the Kubota machines work together as a holistic job site or farm solution.
“At Kubota, we believe that truly listening to our customers drives innovation in every aspect of what we call the ‘Work Loop’,” explains Brett McMickell, Chief Technology Officer of Kubota North America. “The Work Loop — an essential cycle of assessing, analyzing, and acting — has always been fundamental to effective task management. With the integration of advanced sensors, AI-driven analysis, networking protocols, automation, and robotics, we are enhancing this cycle to be more seamless and efficient than ever before.”
That was obvious in some of the more thoughtful implements and attachments on display, including a Smart Plant Imager that uses advanced robotics and “hyper-spectral imaging” cameras to capture real-time data and insights on a plant-by-plant level – as well as a Smart Autonomous Sprayer and Robotic Pruner that that classifies buds and canes based on position and fruiting potential, it optimizes production precision and accuracy.
The more you look, the more impressive Kubota’s farming solution gets. “We will continue to learn from many of our customers across segments to iterate the next product and technology solution that will help them manage tomorrow’s challenges and grow their businesses,” McMickell added. “This is how Kubota works to make a better quality of life for individuals and society.”
The e-bike industry has stalled a little bit in terms of features, and with harsh new legislation coming in from places like California, maybe it is time to start looking at e-bikes that are light, efficient, and smooth rather than how much wattage they can output. The Tenways CGO 600Pro, which comes in at just 37 pounds, is a model e-bike you should keep an eye on…
The CGO 600Pro comes in 2 flavors: a carbon belt single-speed version that Micah reviewed and this one, which is a chain and 8-speed Shimano gears. The belt drive is going to win out on simplicity and weight but if you are expecting to get close to the ‘class 1’ top speed of 20mph or need to go up some significant hills, you’ll want to opt for the chain/gear version here.
One thing I love about this bike is the tradeoff decisions. These keep the price low and weight down while still providing a great ride. The spec sheet overall is solid but not top-shelf.
Tenways CGO600 Pro tech specs (chain/geared version)
Motor: 350 Watt rear hub motor with 45 Nm of torque
Top speed: 20 mph (32 km/h)
Range: Claimed up to 53 miles (85 km)
Battery: 36V 10Ah (360 Wh)
Weight: 37 lb (16.8 kg, over 40lbs with fenders, kickstand, etc)
Frame: 6061 aluminum alloy
Tires: CST Puncture-proof 700*45C-size Tires
Brakes: Tektro dual-piston hydraulic disc brakes
Gearing: Shimano 8-Speed Claris
Extras: Compact LED display, 4 pedal assist levels, slim fender set, kickstand, internally routed cables, LED lighting, removable battery, Tenways app integration, torque sensor, four color options
No Throttle?
Note that as a class 1 e-bike, neither belt/chain version has a throttle. While this may be controversial to some, it not only simplifies the bike, it makes it a Class 1, which will be legal in the most places. I tend to think of no throttle as a “foot throttle” and for the commuter application, this will serve well. Would I appreciate a throttle on a hill start? Perhaps.
The idea of this bike is to just enhance your pedal bike experience. You are going to get some exercise on this bike versus a bike that is a glorified low-power moped that runs on throttle with vestigial pedals.
More importantly, the torque sensor here is phenomenal; I mean, it is probably the best torque sensor I’ve ridden connected to a rear hub motor. The acceleration is smooth and strangely powerful for the 350W/45nm motor. Significant hills are a breeze, and this is one of the few bikes where I forget that I’m using an e-bike sometimes (until I look down and I’m going 20mph with little effort). Hills are also where the gearing really helps.
The tires are also the perfect size for a commuter with puncture resistance and treads that will do OK in rain and snow.
The bike itself is also very stealthy in terms of showing that it is a powered e-bike. The small 36V, 10Ah battery is integrated magnificently into the narrow downtube of the bike. All of the cables are integrated into the bike frame for a super-clean look. The rear hub motor is small but packs a punch. Many people won’t even recognize this as an e-bike. While I’m proud to be riding an e-bike around, perhaps some people would like to keep that on the down-low.
Brakes are great with hydraulic Tektros clasping against 160mm rotors in front and back. It is such a light bike that stopping can be jarring.
Assembly was super easy and took about 30 minutes with the included tool set. The battery came about 40% charged but was ready to go within a few hours with the 3A charger. Shoutout to Tenways for using a water-resistant standardized barrel charger adapter and not some proprietary adapter so that I can use one from another bike when I inevitably lose it.
Electrek’s take
The Tenways CGO600 is a fantastic light, clean, stiff and smooth e-bike that I have 0 reservations about recommending. While the battery and motor are small, they power the light bike admirably and for around 50 miles (your mileage will vary).
Currently there is a $200 off promotion code “HAPPY2025TW” at checkout bringing the CGO600Pro down to $1399 which is an amazing price for this bike:
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Earlier this month, California enacted new regulations for electric bikes that resulted in stricter speed limits on e-bikes with throttles. At the time, it was unclear how electric bike makers would respond to the new regulations, but we’re now starting to see at least one manufacturer pushing to bring its existing e-bikes owned by California residents into compliance.
The new laws remove ambiguity in the Class 2/Class 3 e-bike categorization. Formerly, many e-bikes were designed to operate in either category depending on the owner’s desires. Such bikes could operate as Class 2 e-bikes reaching max speeds of 20 mph (32 km/h) with a throttle, or as Class 3 e-bikes reaching higher speeds of 28 mph (45 km/h) on pedal assist-only.
In fact, the overwhelming majority of Class 3 e-bikes sold in the US used this design, offering hybrid compliance for functionality as both Class 2 and Class 3 e-bikes.
After California’s new laws removed any ambiguity between the classes, it is now clear that e-bikes in the state will need to function either only as Class 2 e-bikes (throttle up to 20 mph) OR Class 3 e-bikes (up to 28 mph but without any throttle).
Globe Haul ST cargo e-bike
It was unclear whether existing e-bikes already sold prior to the law’s enactment would receive an exemption, but bicycle manufacturer Specialized doesn’t seem to be taking any chances.
Specialized is the maker of the Globe line of cargo e-bikes, and recently sent out an update to owners that would help them bring their e-bikes into compliance with California’s new stricter regulations.
Like so many other electric bikes on the market, the Globe e-bikes came with throttles allowing 20 mph speeds without pedaling, but could also reach up to 28 mph on pedal assist.
A new firmware update promoted by the company will essentially restrict its e-bikes to purely Class 2 operation, removing the motor’s ability to assist the bike in going any faster, even when pedaling without throttle operation.
The update will also come with a Class 2 compliance sticker that replaces the previous Class 3 sticker.
To install the voluntary update, Globe owners are encouraged to visit their local Specialized dealer.
A copy of the update letter was shared on Reddit and can be seen below.
Electrek’s Take
This is an interesting approach, because it indicates an understanding by Specialized that it is responsible for any of its e-bikes already on the road that have now been made non-compliant by the new law.
There are basically two main options to “fix” these previously hybrid Class 2/3 e-bikes and bring them into compliance. One is to unplug and remove the throttle, turning the bike into a true Class 3 e-bike under CA regulations. The other is to remove the ability for the motor to assist at speeds over 20 mph, turning it into a Class 2 e-bike. That latter is what Specialized appears to have decided to go with, and it makes sense to me. If you asked most owners of these e-bikes about which they’d give up if they had to, they’d probably tell you “take my 21-28 mph speed but leave me my throttle”. Throttles are simply such a major part of e-bikes in North America that most riders would give up the whole bike if they were forced to give up the throttle.
The bigger question here is how many Globe riders will actually install this update. Since you need to not only opt-in to it, but also physically visit a dealer to do it, I have to imagine that the vast majority of riders will simply ignore the update altogether, keeping their faster non-compliant speed on an e-bike with a throttle. I’m not saying that’s the right thing to do, but I am saying it’s what will happen in the real world.
And if we are being honest, these Globes aren’t even the e-bikes that are at the heart of the issue. Most CA residents are more concerned with teenagers ripping down sidewalks on moped-style e-bikes, not the local moms and dads riding to Trader Joe’s on their sensible, upscale cargo e-bikes that just happen to have hybrid Class 2/3 performance.
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