Maersk warns of Red Sea disruption impacting Asia-Europe shipping routes, cutting capacity by 20pc

The container shipping industry remains confronted with disruptions in the Red Sea, with Maersk projecting a potential 20 per cent reduction in capacity between Asia and Europe in the second quarter.

According to Reuters, Maersk and other shipping firms have rerouted vessels around Africa's Cape of Good Hope to evade attacks by Iran-aligned Houthi militants in the Red Sea since December.

This has led to increased cruise times and heightened freight rates.

According to Maersk, the risk zone for attacks has expanded, compelling vessels to extend their voyages, resulting in increased time and costs for cargo transportation.

Maersk's fuel expenses on affected routes between Asia and Europe have increased by 40 per cent per journey due to the longer detours.

Hapag-Lloyd, another major shipping company, confirms these challenges, opting to avoid the Red Sea at present.

By redirecting traffic away from the Suez Canal, Maersk estimates a major reduction in container industry capacity between Asia and Northern Europe and the Mediterranean, ranging between 15-20 per cent in the second quarter.

This disruption has ripple effects across various container freight routes, particularly those connecting Asia to the east and west coasts of South America, leading to complexities in global supply chain logistics.

Maersk, renowned as a key indicator of global trade, anticipates that these disruptions will persist at least until the end of 2024.

Meanwhile, France's CMA CGM continues to navigate some vessels through the Red Sea under a naval escort, although the majority of its ships are being rerouted around Africa to mitigate risks.

CEO Rodolphe Saade highlighted challenges related to port congestion and the need for alternative destinations such as Algeciras or Valencia in Spain.

The repercussions of voyages around Africa include operational bottlenecks, vessel congestion at ports, and shortages of equipment and capacity.

To address reliability concerns, Maersk has adopted measures such as increased sailing speeds and leasing over 125,000 additional containers.

(With inputs from Reuters)