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regular-article-logo Wednesday, 20 November 2024

Maersk and CMA CGM two largest shipping firms impose surcharges post Red Sea attack

The surcharges, designed to cover longer voyages around Africa compared with routes via the Suez Canal, will add to rising costs for sea transport since Yemen’s Houthi militant group started targeting vessels

Reuters Paris, Oslo Published 23.12.23, 04:49 AM
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Maersk and CMA CGM, two of the world’s largest shipping firms, will impose extra charges after deciding to re-route ships following attacks on vessels in the Red Sea, as worries about the disruption to global trade grow.

The surcharges, designed to cover longer voyages around Africa compared with routes via the Suez Canal, will add to rising costs for sea transport since Yemen’s Houthi militant group started targeting vessels.

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Maersk and CMA CGM are among the leading shipping lines to have suspended the passage of vessels through the Red Sea that connects with the key Suez Canal, the quickest sea route between Asia and Europe.

Instead, they are directing ships around the Cape of Good Hope at the southern tip of Africa, adding about ten days to a journey that would normally take about 27 days from China to northern Europe.

Citing “severe operational disruption”, Maersk said late on Thursday that additional payments include an immediate transit disruption surcharge (TDS) to cover extra costs associated with the longer journey as well as a peak season surcharge (PSS) from January 1.

Earlier on Friday, Chinese automaker Geely told Reuters its electric vehicle sales were likely to be hurt by a delay in deliveries to Europe, the latest company to warn of disruption

China’s second-largest automaker by sales said most of the shipping firms it uses for European exports have plans to go around southern Africa.

The alert bodes ill for other automakers in China as they seek to increase exports to Europe due to overcapacity and weak demand at home. The US has announced a multinational force to patrol the Red Sea, but sources say details have yet to emerge and companies continue to avoid the zone.

In a message to customers, logistics firm CH Robinson Worldwide said it had rerouted more than 25 vessels to southern Africa over the past week.

“That number will likely continue to grow due to ongoing war risks in the Red Sea and the drought in the Panama Canal,” it said. It said cancellations and rate increases were expected to continue into the first quarter.

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