CMA CGM Says Red Sea Ship Unharmed After Militants Claim Attack

Ocean freight giant CMA CGM says one of its vessels in the Red Sea was unharmed and “did not suffer any incident” after Houthi militants on Wednesday claimed that they attacked the ship.

Houthi military spokesperson Yahya Sarea said in a televised speech that the group had “targeted” the CMA CGM Tage container ship, but didn’t identify when or where the incident took place. Sarea said the Yemen-based group issued warnings that the ship’s crew ignored.

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The CMA CGM Tage is still traveling north on the Red Sea en route from Singapore to Alexandria, Egypt, and is set to pass through the Suez Canal.

Unlike container shipping rivals including Maersk, Hapag-Lloyd and Mediterranean Shipping Company (MSC), CMA CGM has been sticking it out in the region, saying last week that it planned to send more ships through the Suez.

The Iran-backed Houthi rebels have targeted commercial ships in the Red Sea in the wake of the Israel-Hamas war in Gaza, forcing affected companies to pay more to reroute around southern Africa’s Cape of Good Hope—effectively tacking on two weeks of transport time and raising freight costs for retailers and brands.

Prior to the reports, CMA CGM said it would charge up to 100 percent more for Asia to the Mediterranean container shipping rates starting Jan. 15, versus Jan. 1. The ocean carrier’s “freight all kinds” rate for a 40-foot container equivalent unit (FEU) between Asia and the West Mediterranean region will double from $3,000 to $6,000.

Across the board, freight rates have gone through the roof, particularly for areas on the Suez Canal route, according to the Freightos Baltic Index (FBX). Asia-to-Northern Europe prices skyrocketed 151 percent to $4,042 per FEU since companies started diverting their shipments from the embattled area in mid-December, while Asia-to-Mediterranean rates leapt 108 percent to $5,175 per FEU. Asia-to-U.S. West Coast prices jumped 63 percent to $2,713 per FEU, while Asia-to-U.S. East Coast rates increased 55 percent to $3,900 per FEU.

“I do expect prices to be passed along to consumers, generally speaking,” said Matt Muenster, chief economist at transportation and shipping solutions provider Breakthrough, noting the increase in energy costs that stem from longer route times.

“For some businesses, it’s going to require time for these costs to be passed along,” Muenster told Sourcing Journal. “This could be something that lasts a month, or it could be something lasts the entire entirety of 2024.”

Reports of the attempted attack surfaced a day after U.S. Central Command said the militant group had fired two anti-ship ballistic missiles in the southern Red Sea.

The reported targeting of the CMA CGM ship also came a day after Maersk suspended ships from entering the strait for a second time. The decision came after one of its assets, the Maersk Hangzhou, was attacked Saturday in two separate waves before a nearby U.S. Navy operation thwarted the onslaught.

Since November, at least 22 commercial vessels have been targeted in the Red Sea and the neighboring Gulf of Aden, according to data from Everstream Analytics, driving container shipping capacity there down to just 12.7 percent of its typical norm.

“This means that 12 out of 14 container ships that typically move through the Red Sea and Suez Canal daily are taking the long trip around the Cape of Good Hope,” said Julie Gerdeman, CEO of Everstream Analytics. “This ongoing uncertainty and disruption to shipping schedules will likely cause delays and higher costs, especially for European supply chains.”

The number of container ships circumnavigating the Cape of Good Hope has increased from 18 on Dec. 3 to 124 as of Wednesday, a 588 percent increase, according to data from global trade intelligence platform Kpler.

In a LinkedIn post, Jean-Charles Gordon, ship tracking director at Kpler, noted a 15 percent month-on-month decrease in northbound and southbound crossings through the Bab el-Mandeb Strait, indicating a sustained preference for rerouting around the Cape of Good Hope.

Although the potential supply chain bottlenecks are constraining cargo movement at sea and roiling ocean freight rates, they may be pushing more companies to lean on air freight.

“The increased ocean transit times shall put pressure on inventories and have an immediate repercussion on air freight capacities, with significant price hikes expected on major trades,” said Bolloré Logistics in a Thursday update.

Bolloré added that it anticipates additional air freight capacity to open up between mid-January and early February.

However, the air cargo market has yet to reflect any pickup in the wake of ongoing attacks. According to data from WorldACD, preliminary figures for week 51 of 2023 (Dec. 18-24) show a drop of 8 percent in global tonnages carried and a 6 percent dip in average worldwide air freight rates compared with the previous week.

“This slide in tonnages and rates follows the typical pattern seen in the second half of December,” WorldACD said.