Maersk to customers: Brace for complications, disruptions in Red Sea

01/23/2024 / By Richard Brown

The situation in the Red Sea has become increasingly complex following President Joe Biden’s military strikes against Iran-backed Houthi anti-ship missile bases, raising serious concerns about global supply chain stability and economic growth.

The Houthi rebels’ continued attacks on commercial vessels in the region have led to significant repercussions for the international shipping industry.

Top container shipper AP Moller-Maersk, recognizing the heightened risks, sent a memo to its customers advising them to brace for complications and disruptions in the Red Sea region. The memo expressed the company’s commitment to contributing to a sustainable resolution while acknowledging the potential for a prolonged impact on the global shipping network.

Major shipping companies, including Maersk and Hapag-Lloyd, have taken precautionary measures by diverting vessels onto longer and more expensive routes around the Cape of Good Hope to avoid the Houthi threat. (Related: Major shipping giants HALT Red Sea route following Houthi attacks on shipping vessels.)

Shell, the latest company to respond to the escalating conflict, has suspended all Red Sea shipments.

Maersk CEO Vincent Clerc, speaking at the World Economic Forum in Davos, highlighted the uncertainty surrounding the situation, anticipating longer transit times and disruptions to the supply chain for at least a few months. He stressed the challenge of predicting the development of the crisis.

Stifel shipping analyst Ben Nolan, in a recent communication to clients, underscored the worsening conditions in the Red Sea, indicating a lack of improvement. The ongoing disruptions in the region have prompted companies to rent additional vessels, reducing overall shipping capacity and contributing to a surge in shipping rates over the past weeks.

The cumulative effect of the chaos in the Red Sea has reverberated across global trade, resulting in a noticeable decline.

As the situation continues to unfold, businesses are grappling with the unpredictable nature of the conflict and its far-reaching consequences on the interconnected web of international commerce.

Inclement weather, rerouting of vessels away from Red Sea impact Maersk’s operations across Europe

Meanwhile, inclement weather causing disruptions at ports in northern Europe and the rerouting of vessels away from the Red Sea are leading to congestion at container terminals, according to an update provided by A.P. Moller-Maersk Thursday, Jan. 18.

Maersk, along with other shipping groups, has redirected vessels away from the Red Sea and the Gulf of Aden due to attacks by Yemen’s Houthis, opting for a longer journey around Africa rather than the Suez Canal shortcut.

In northern Europe, terminal closures and navigation stoppages, exacerbated by winter storms and the aftermath of the recent holiday season, are contributing to the challenges faced by shipping companies, Maersk reported. The company anticipates that both winter weather conditions and the Red Sea contingencies will impact operations across European and Hub terminals.

As a result of these challenges, there is an increase in yard density across terminals, prompting Maersk to request customers to promptly retrieve their units after discharge to support operational fluidity.

Clerc, commenting on the global shipping disruption caused by Red Sea attacks, indicated that the impact is likely to persist for at least a few months.

In the company’s Thursday update, Maersk emphasized its commitment to seeking a sustainable resolution while advising customers to anticipate ongoing complications and significant disruptions to the global network.

Acknowledging the challenges, Maersk also informed customers of the option to shift some cargo from vessels to air freight at ports in Oman and the United Arab Emirates. This alternative allows for the expedited transportation of goods to final destinations in Europe or the United States.

The turmoil in the Red Sea has contributed to a surge in container shipping rates for key global trade routes.

Concerns about a prolonged disruption to global trade traffic in one of the world’s busiest routes have intensified, particularly with U.S. and U.K. air strikes on Yemen adding to the uncertainties surrounding the situation.

Watch this clip about the Red Sea attacks that may lead to World War III.

This video is from the Thisisjohnwilliams channel on Brighteon.com.