Share

Red Sea disruption could cut Asia-Europe capacity by 15-20 percent in Q2: Maersk

Maersk anticipates shipping disruptions to persist at least until the end of the year
Red Sea disruption could cut Asia-Europe capacity by 15-20 percent in Q2: Maersk
The company is currently using 40 percent more fuel per journey with charter rates currently tripling

Shipping group Maersk has warned of increasing disruptions to container shipping traffic in the Red Sea, with expectations of a significant reduction of 15-20 percent in industry capacity between the Far East and Europe in Q2 of 2024.

The escalation of attacks in the Red Sea has prompted shipping companies to divert vessels around Africa’s Cape of Good Hope since December, leading to longer voyage times and higher freight rates. “However, the risk zone has expanded, and attacks are reaching further offshore,” stated Maersk in its latest advisory. This has forced the shipping company to lengthen its vessels’ journeys, which has increased the time and cost of shipping.

The company stated that the knock-on effects of the situation include bottlenecks and vessel bunching, in addition to delays and equipment and capacity shortages.

To manage the disruptions, Maersk has leased more than 125,000 additional containers. Moreover, it has increased shipping charges to account for the rising costs of longer journeys, increased sailing speed, and additional fuel costs. In the statement, the company revealed that it is currently using 40 percent more fuel per journey with charter rates currently tripling. “We will continue to seek ways to improve our offering and meet your supply chain needs,” added the company.

Read: China’s Xinxing Ductile to invest $400 million in Egypt within 5 years

Maersk anticipates shipping disruptions to persist at least until the end of the year, while Germany’s Hapag-Lloyd expresses a slightly more optimistic outlook, aiming to overcome the crisis before the end of 2024. Meanwhile, France’s CMA CGM continues to send some vessels via the Red Sea with naval escorts, but the majority are being rerouted around Africa, leading to logistical challenges and port congestion.

For more news on logistics, click here.

The stories on our website are intended for informational purposes only. Those with finance, investment, tax or legal content are not to be taken as financial advice or recommendation. Refer to our full disclaimer policy here.