Suez Canal traffic has dropped 66%, Maersk claims
NewsSince shipping companies rerouted around Africa, Suez Canal traffic has dropped 66%, causing port congestion and supply chain disruptions, Maersk reports.
Maersk: Red Sea disruptions impacting entire ocean network
As the Red Sea crisis protracts into the third quarter of 2024, Maersk points to the domino effect of the disruptions across the global ocean network.
The Red Sea crisis, which began in December 2023, has had massive impacts on global supply chains, a situation that persists into the third quarter of 2024. As vessels are forced to divert around the Cape of Good Hope, the industry faces severe capacity constraints.
Maersk CEO Vincent Clerc highlighted the “massive impacts” during a recent online event, noting that the extended routes require additional ships, two to three depending on the trade in question, further straining already tight capacity at a time of strong demand for container transport.
“Today, all ships that can sail and all ships that were previously not well utilised in other parts of the world have been redeployed to try to plug holes. It has alleviated part of the problem, but far from all the problems across the industry, including for Maersk,” Clerc said.
“We are going to have in the coming month missing positions or ships that are sailing that are significantly different size from what we normally would have on that string, which will also imply reduced ability for us to carry all the demand that there is.”
Cascading effect
Clerc added that Asian exports are more impacted than Asian imports by the ongoing Red Sea situation. This is primarily because Asian countries are major global exporters, with China being the largest exporter to many Asian nations. Routes between the Far East and Europe via the Suez Canal have been directly affected, causing disruptions in most trade routes. These disruptions have extended beyond the Far East-Europe routes, impacting the entire ocean network, he said.
He noted that key routes from the Far East to the Mediterranean, US coasts, South America, West Central Asia, and Africa face limited capacity despite added space.
According to Maersk, the Oceania network is severely affected by congestion in Southeast Asian hubs, crucial for linking Oceania’s cargo to the company’s global network. This is due to equipment shortages and limited capacity.
“The delays in Southeast Asian hubs pose a risk of disruption at Australian ports due to vessel bunching on arrival, resulting in longer waiting times and other delays. The congestion and disruption have extended beyond the hubs and into Northeast Asia and Greater China ports, causing delays,” Maersk said, adding that Oceania exporters should factor in additional lead time as part of supply chain planning.
The company attributed the widespread domino effects to congestion at key Asian ports, which has caused delays and bottlenecks throughout the entire system, and the reorganisation of ocean networks, with vessels moved to different regions to better meet capacity demands, widening the global impact beyond the initially affected areas.
Capacity expansion
To minimise the disruption, Maersk said it was investing in securing additional containers and exploring further capacity enhancements. The company is also adjusting its network and supply strategies to better align supply with business demand for capacity, preparing for continued disruptions.
Media reports citing brokers indicate that container shipping majors including CMA CGM, Ocean Network Express (ONE) and Maersk are returning to shipyards to book additional container ship capacity. As WCN reported yesterday, CMA CGM has been linked to an order for 12 newbuilds, and more recently ONE for 10 methanol dual-fuel 13,000 TEU containerships.
Maersk is reportedly also looking to order up to 22 LNG-fuelled containerships, however, the company has not yet confirmed these rumours.
Aside from ocean transport, Maersk’s recent investment in the air freight business is looking like a viable option. The company said that for time-sensitive goods that need to be moved quickly, its air freight service, including a sea-air solution, may be used as a transport alternative.
Maersk Air Cargo (MAC) took delivery of its first of two new Boeing 777F on July 12. These are the first Boeing 777s owned by a Danish airline. Both are scheduled to be deployed on Maersk’s existing Europe-China route with initially three weekly flights, and later up to six weekly flights.