Global Shipping Companies Still Avoid Red Sea Routes. Houthi attacks on cargo ships in the Red Sea have meant that global shipping companies continue to avoid the route. This could threaten to increase shipping costs and trigger fears of a global inflationary attack.
Denmark’s Maersk and German rival Hapag-Lloyd said their container ships would continue to avoid Red Sea routes that have access to the Suez Canal.
The two shipping giants have changed their shipping routes via the Cape of Good Hope in southern Africa. Meanwhile, Maersk on Sunday (31/12/23) stopped all shipping in the Red Sea for 48 hours following an attempt by the Houthis to board the Maersk Hangzhou ship. US military helicopters managed to repel the attack.
Hapag-Lloyd also said that its ships would continue to divert from the Red Sea by sailing through the southern tip of Africa, until at least January 9, 2024.
It is known that the Suez Canal is used by about a third of global container ship cargo. Diverting ships via the southern tip of Africa is estimated to cost up to US$1 million in additional fuel costs for each round trip between Asia and northern Europe.
Then, concerns about potential supply disruptions in the Middle East following the latest Red Sea attacks pushed up oil prices in the first trading session of 2024.
Expectations that longer routes will lead to higher shipping rates have driven shipping company shares higher since the crisis began, and Maersk shares rose 6.3% in afternoon trading. Hapag-Lloyd shares rose 5%.
French shipping group CMA CGM will increase container shipping rates from Asia to the Mediterranean region by up to 100% as of January 15, 2024, compared to January 1, 2024.
According to Maersk, its alliance partner, Mediterranean Shipping Company (MSC) continues to divert its vessels via the Cape of Good Hope. MSC also did not immediately respond to a request for comment.
