- The container shipping firm Maersk temporarily stopped all Red Sea sailings to prevent potential threats from Yemen-based Houthi militants.
- Over 30 Maersk container vessels were scheduled to transit through Suez via the Red Sea. Seventeen other voyages had to be postponed.
- Due to a potential disruption in the Middle Eastern supply following a recent Red Sea assault, oil prices have risen.
- Shipping stocks are predicted to rise as longer freight routes could lead to increased freight rates.
- CMA CGM, a French shipping group, had doubled its container shipping charges from Asia to the Mediterranean region since Jan. 15.
Shipping Disruptions in the Red Sea
Following attempts by Yemen-based Houthi militants to board the Maersk Hangzhou, the container shipping company halted all Red Sea sailings for two days. U.S. military helicopters successfully thwarted the attack, resulting in the death of 10 assailants.
More than 30 Maersk container vessels were planned to transit through the Suez Canal via the Red Sea based on an advisory on Monday. Meanwhile, 17 other tours were put on hold, with a decision to be made on Tuesday regarding the next move, the company’s representative stated.
Alternate Routes and Impacts on Shipping
Hapag-Lloyd, the German shipping company continues to use alternate routes, specifically via southern Africa’s Cape of Good Hope, till Jan. 9 instead of the Red Sea. The spokesperson confirmed that post-Jan. 9, the company will decide whether to proceed with the re-routing or not.
The Red Sea attacks have alerted oil prices into a surge in the new year as there is potential disruption to the Middle Eastern supply. Shipping companies’ stock values are expected to rise due to predictions of higher freight rates due to lengthier routes arising from the crisis.
Effects on Market
Non-listed French shipping conglomerate, CMA CGM raised its container shipping rates from Asia to the Mediterranean by up to 100% starting from Jan. 15. Maersk shares witnessed an upsurge by 6.3%, and Hapag-Lloyd shares increased by a margin of 4.1%.
The Hangzhou was hit by an unidentified object during the attack but managed to sail on. Shipping data indicated that this vessel was near the Suez Canal. Container ship cargo utilises the Suez Canal for approximately a third of its global movements.
Diverting the ships to sail around the southern tip of Africa could potentially incur about $1 million as additional fuel costs for every round trip between Asia and Northern Europe.
This confrontation may have significant implications on forex trade by affecting the trading value of related assets.