Vincent Clerc, chief executive of shipping giant Maersk Co., said on Wednesday that disruptions to global shipping caused by attacks on ships in the Red Sea are likely to last at least several months. Maersk and other major shipping companies have directed hundreds of merchant ships away from the Red Sea and around longer routes around Africa in response to Houthi attacks on passing ships.
"So for us it will mean longer shipping times and probably supply chain disruptions for at least a few months, hopefully shorter, but possibly longer because the actual development of this situation is so unpredictable," Clerc said in Davos, Switzerland.
Freight rates have more than doubled since the start of December, according to maritime consultancy Drewry's World Container Index, while insurance sources said insurance premiums were also rising due to the risk of war in shipping through the Red Sea.
Banking executives say they worry the crisis could create inflationary pressures that could ultimately delay or reverse interest rate cuts. "This is extremely damaging because nearly 20% of global trade passes through the Bab el-Mandeb Strait. It is one of the most important arteries for global trade and global supply chains, and it is now blocked."