Maersk noted that while the peak season surcharge was recently reduced, it has been increased again to help cover the additional costs resulting from the changes. Image for representation purposes only. File | Photo credit: CV Subrahmanyam
Global shipping company Maersk estimates an industry-wide capacity loss of 15 to 20% in the Far East, Northern Europe and Mediterranean markets, mainly between Asia and Europe, during the second quarter of this financial year. This is due to the Red Sea crisis, which they say has intensified in recent months.
“To protect our crew, ships and cargo, we will operate a new route around the Cape of Good Hope in the near future. However, the risk zone has expanded and the attacks extend further from the coast. This has forced our ships to further extend their journey, resulting in additional time and costs for the time being to get your cargo to its destination,” Maersk said in its latest advisory on May 6.
Also read | Can IMEC tackle the Red Sea crisis?
The impact of the situation in the Red Sea is widening and continues to cause sector-wide disruptions, the report noted.
Maersk increases the charges
Since the launch of Israel’s offensive in Gaza, there have been a series of rocket and drone attacks on commercial ships belonging to entities linked to Israel by Houthi rebels from Yemen.
Maersk elaborated on the consequences of the situation in the Red Sea, saying these include bottlenecks and congestion of ships, as well as delays and shortages of equipment and capacity. In this context, Maersk has leased more than 125,000 additional containers.
Look | The Red Sea is seething: India’s economic costs are rising
The company has informed customers that they will see relevant surcharges on the final bills. “These should compensate for the costs of the longer journeys, the higher sailing speed and the extra fuel costs. For example, we currently use 40% more fuel per trip and charter rates are currently three times higher, often fixed for five years,” the report says.
Maersk noted that while the peak season surcharge was recently reduced, it has been increased again to help cover the additional costs resulting from the changes.
Securing the Red Sea
In response to the escalation of missile and drone attacks from Houthi-held areas, US Secretary of Defense Lloyd J. Austin announced the creation of Operation Prosperity Guardian on December 18. The operation is a “major new multinational security initiative under the umbrella of the Combined Maritime Forces and the leadership of its Task Force 153, which focuses on security in the Red Sea.”
Although India has not joined the US-led initiative, it has increased its presence in the North Arabian Sea, the Horn of Africa and the Gulf of Aden to provide assistance to ships under fire and to combat the increase in to tackle Somali piracy. . At the height of tensions a few months ago, as many as twelve frontline warships were deployed in the region for maritime security operations.
From mid-December to March 23, as part of the Indian Navy’s Phase 2 of Operation Sankalp, more than 5,000 personnel were deployed at sea, over 450 ship days (with more than 21 ships deployed). Maritime surveillance aircraft have completed 900 flight hours to tackle threats in the maritime domain, Admiral R. Hari Kumar, the then Chief of Navy, now retired, said.
