On Thursday (January 11) local time, Maersk CEO Vincent Clerc told the media that the closure of the Red Sea to container ships after a series of attacks by Houthi armed forces in Yemen was "bad." He points out that there is no "winner" in this situation, as the journey around South Africa's Cape of Good Hope is long and expensive.
It is understood that about 12% of global trade transportation and 30% of container transportation pass through the Red Sea. If the cargo ship sails around the Cape of Good Hope instead of the Suez Canal, the voyage from Rotterdam in the Netherlands to Singapore will increase by 40% (approximately 3,800 nautical miles), and the transportation and fuel costs will exceed US$2 million.
Maersk is a leader in global trade, handling about one-fifth of all sea freight. "We don't know whether we will re-establish safe passage into the Red Sea in days, weeks or months... This could have a pretty significant impact on global economic growth," Ke Wensheng said, calling on the international community to take more action.
Since the middle of last month, the Houthi armed forces in Yemen have expanded the scope of their attacks on Israeli targets and begun to attack "Israeli-related ships" in the Red Sea. They have continued to escalate related threats, resulting in multiple cargo ships being attacked in nearby waters, and many shipping companies announcing that they would reroute to the Cape of Good Hope.
Maersk once believed that the situation had eased and said it would arrange for dozens of the company's cargo ships to return to the Red Sea. However, two weeks ago, Maersk's "Hangzhou" encountered two attacks while sailing north in the southern waters of the Red Sea. The company finally decided to suspend all ships passing through the Red Sea and the Gulf of Aden. As for when to resume, it will be notified separately.
Ke Wensheng said that diverting container ships to the Cape of Good Hope will add about 13,000 kilometers to the route, and each container will also need to pay hundreds of dollars more. "At a time when inflation is a big issue, it puts inflationary pressure on our costs, our customers, and ultimately European and U.S. consumers."
"In the short term, it may cause major disruptions at the end of January, February and March." Ke Wensheng said that the fuel costs of Maersk ships will increase by 50%. If the problem is not solved, the ships will soon be dislocated, threatening logistics and the global supply chain. "We urge the international community to act, do what needs to be done, and reopen the strait."
"It is one of the main arteries of the global economy, and it is currently being blocked." He added, "This is not only for the industry, but may also have a broader impact on end consumers, product supply, and the global economy as a whole."
It is worth mentioning that the share price of Maersk, which is listed in Denmark, has risen by nearly 25% in the past month. The market believes that rising freight rates may be beneficial to the company's revenue. In response, Ke Wensheng responded, “Our goal is to establish a safe channel and return to normal trade patterns.”