Since the end of last year, Maersk and a number of other shipping companies have had to suspend their Red Sea to Suez Canal routes due to unrest and frequent drone and missile attacks on cargo ships. Recently, Maersk issued an updated warning that the Red Sea crisis has not only not eased, but has become more serious and complicated in the past few months.
Maersk's emergency chartering of more than 125,000 containers
Maersk said that the impact of the Red Sea situation is expanding and continues to wreak havoc on the industry as a whole. The complexity of the situation in the Red Sea region has increased over the past few months and in order to ensure the safety of crews, vessels and cargo, Maersk will continue to round the Cape of Good Hope for the foreseeable future.
However, as the risk area has expanded, the attacks have spread further out to sea. This has forced our vessels to extend their voyages further, which has led to an increase in the time and cost required for our customers' cargoes to reach their destinations.
The knock-on effects of this situation include port congestion, vessel delays, and shortages of equipment, capacity and containers. Maersk expects to lose 15-20 per cent of capacity across the industry in the second quarter in the Far East to Northern Europe and Mediterranean markets.
In response, Maersk has also taken measures to deal with the current situation, hoping to speed up sailings and increase capacity. To protect its supply chain, Maersk has leased more than 125,000 additional containers.
At the same time, Maersk will charge customers a surcharge related to the 40 per cent increase in fuel usage due to longer voyages to offset the additional costs.
Previously, in response to the outlook for container demand, CIMC mentioned in its Q1 2024 results the high willingness of liner companies to prepare containers.
In the first quarter of 2024, CIMC's cumulative sales of standard dry containers totalled 494,400 TEU, a year-on-year increase of 499.27%. CIMC analysed: "In order to cope with the impact of the prolonged Red Sea crisis and other risks leading to increased uncertainty in global container transport, customers' current willingness to prepare containers has significantly increased."
Less than half of on-time arrival rate
However, despite these efforts by Maersk, severe delays continue to plague the company and its customers.
The latest figures from consultancy Sea-Intelligence show that less than half of Maersk's ships arrived at ports on time in the first quarter of this year, down 16.1 per cent compared to the fourth quarter of 2023.
The figure represents the biggest drop in rankings of any major shipping company, slipping Maersk to 10th place out of 13.
At the same time, Maersk faced stiff competition from its rivals.
Although Maersk has not invested heavily in new ships, many of its competitors have used the billions of dollars earned during the epidemic to buy old ships and order new ones. This could lead to excess capacity in the future, which could put pressure on freight prices.
German investment bank Bernstein pointed out in an analysis report after Maersk's results were announced that in the current shipping market environment, especially in the context of excess capacity, container shipping companies are supposed to take a more prudent strategy rather than blindly expand.
However, it is a matter of concern that some major shipping lines such as ONE, HMM and Hapag-Lloyd are still discussing growth plans, which is to some extent irrational behaviour. And it warns that if shipping companies continue to expand their fleets without taking into account changes in market demand, then this could prolong the period of pain for the industry.
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