AP Møller-Maersk said vessels sailing through the Red Sea will be rerouted around Africa via the Cape of Good Hope because of the threat of attacks by Yemeni rebels, adding to the potential disruption of vital trade through the Suez Canal.
On Tuesday, Maersk, the world’s second-largest container shipping fleet, said its vessels would be diverted because of the “highly escalated security situation”.
According to a Financial Times report, the company had paused all vessels due to pass through the Bab-el-Mandeb strait last Friday because of security concerns.
- “The attacks we have seen on commercial vessels in the area are alarming and pose a significant threat to the safety and security of seafarers,” the company said in a statement.
- “This decision was taken to ensure the safety of our crews, vessels, and customers’ cargo onboard.”
Iran-backed Houthi rebels have intensified their campaign against ships passing through the Red Sea, which leads to the Suez Canal, following the outbreak of the Israel-Hamas war, with more than 10 attacks on ships in the area since then.
Most of the attacks have been on vessels with ties to Israel, including several with ownership links to the Ofer family, who are among the world’s most powerful shipping dynasties, according to maritime intelligence reviewed by the Financial Times.
The decision coincides with other shipping groups:
According to the report, Maersk’s decision coincides with similar moves by other shipping groups. German company Hapag-Lloyd diverted all ships on Monday to go via the Cape of Good Hope, MSC decided on Friday to reroute some of its services and Marseille-based CMA CGM is taking similar action.
CMA CGM said in a note to clients that it was deeply concerned about the attacks on commercial vessels unfolding in the Red Sea region.
- It has rerouted some vessels at present sailing to and from the US, North Europe and Asia or the Indian subcontinent to travel via the southern tip of Africa, and instructed others to reach safe areas and pause their journeys until further notice.
- “We will continue to monitor the situation closely and stay in direct consultation with authorities, industry bodies and all relevant counterparts,” said Lasse Kristofferson, chief executive of shipping company Wallenius Wilhelmsen, which announced on Tuesday that it was taking similar measures to divert vessels around Africa.
- The rerouting is expected to add between one to two weeks to voyage durations.
The attacks risk disrupting global supply chains:
The attacks in the area risk disrupting global supply chains that depend on the Red Sea and the Suez Canal. The waterway accounts for 30% of all container ship traffic and is a vital conduit for crude oil shipments.
Michael Aldwell, executive vice-president of Swiss logistics group Kuehne+Nagel said about 19,000 ships navigated through the Suez Canal each year, typically taking 30 to 40 days to complete an Asia-Europe voyage.
- “Choosing this alternative route from Asia to Europe may extend the journey by three to four weeks,” he added.
Maersk said that, as of Monday, it had about 20 vessels paused, half of which were waiting east of the Gulf of Aden and the rest waiting south or north of the Suez Canal. BP became the first oil major to pause all shipments through the area on Monday.
Trafigura, one of the world’s largest commodities traders, said on Friday it was “taking additional precautions” for its owned and chartered vessels.
An expanded international task force
The decision to divert ships comes as US defence secretary Lloyd Austin on Tuesday announced an expanded international task force to protect ships passing through the Red Sea, which would include the UK, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain.
The group will conduct joint patrols in the southern Red Sea and the Gulf of Aden.
- “This is an international challenge that demands collective action,” he said.
- Aldwell said: “The extended time spent on the water is anticipated to absorb 20% of the global fleet capacity, leading to potential delays in the availability of shipping resources.”
What you should know
AP Møller-Maersk recently said it plans to axe at least 10,000 jobs as the container shipping industry’s pandemic-driven boom gives way to weaker demand during the economic downturn.
The owner of the industry’s second-largest fleet said on Friday it was stepping up cost cuts as the global cost of living crisis hits harder.
- Container shipping lines had already warned this year would be much tougher, but the outlook has deteriorated.
- Maersk chief executive Vincent Clerc warned that shipping costs would remain under pressure for the next two years, adding the Danish group had been forced to make significant job cuts, including in its logistics business despite ambitions to expand its presence on land and across the supply chain.
- The redundancies are the latest sign of how dramatically a downturn in consumer spending has reversed the fortunes of container shipping companies, whose performance is seen as a bellwether for global trade.
These businesses generated record profits during the Covid-19 lockdowns when increased spending on online shopping and supply constraints caused by port congestion helped drive up the cost of shipping.
