Maersk, CMA CGM Prep Vessels for Red Sea Return

Some container shipping giants are arranging returns to the Red Sea after a U.S.-led coalition was established to fight off attacks on vessels passing through the waterway.

Three days after A.P. Moller-Maersk asserted that it would prepare to allow vessels to resume transit through the Red Sea and the Gulf of Aden, the global logistics company unveiled Wednesday that 59 ships are set to continue their voyage through the Suez Canal.

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The schedule remains subject to change based on specific contingency plans that may be formed over the coming days, Maersk said.

CMA CGM beat Maersk to the punch, saying Tuesday in its own service update that some vessels already had made their transit through the Red Sea.

“This decision is based on an in-depth evaluation of the security landscape and our commitment to the security and safety of our seafarers,” CMA CGM said in the advisory. “We are currently devising plans for the gradual increase in the number of vessels transiting through the Suez Canal.” The container shipping company said it is monitoring the situation constantly and is ready to promptly reassess and adjust plans as needed.

Earlier this month, ocean carriers including Maersk, CMA CGM, Mediterranean Shipping Company (MSC) and Hapag-Lloyd initially halted vessel traffic through the Red Sea and its chokepoint, the Bab el-Mandeb Strait, amid a string of missile attacks on ships from Yemen-based Houthi militants.

According to data from maritime intelligence platform EeSea, 212 vessels have been rerouted around Africa due to concerns of attacks within the Bab el-Mandeb Strait and the Red Sea.

Although the moves from Maersk and CMA CGM represent a sign of confidence in the U.S.-led Operation Prosperity Guardian (OPG), the multinational naval operation built to counter the Houthi threat and shield commercial traffic from attacks, not all ocean freight competitors are set on bring back Red Sea traffic just yet.

Hapag-Lloyd said in a statement that “the situation remains too dangerous” to cross the Suez Canal, with the company saying it would keep diverting ships around southern Africa’s Cape of Good Hope.

The Germany-based ocean carrier said it was continuously monitoring the developments and will regularly reassess the situation, assuring that it would resume services through the Suez Canal “when it is deemed safe for our vessels, crews and your cargo on board.”

MSC confirmed Tuesday that one of its container ships, the MSC United VIII, was attacked while transiting the southern Red Sea en route from King Abdullah Port, Saudi Arabia to Karachi, Pakistan. The vessel informed a nearby coalition task force warship of the attack and “engaged in evasive maneuvers” as instructed.

The Iran-backed Houthis claimed responsibility for the attack.

All crew members safe and no injuries have been reported, with the company saying a thorough assessment of the vessel is being conducted.

The decisions from Maersk and CMA CGM would be a sigh of relief for shippers, particularly those in Europe, that are relying on goods to be transported via the Suez Canal. Approximately 20 percent of global container shipments flow through the Red Sea and Suez Canal, making the gateway a vital area for facilitating global trade.

The alternative route around the Cape of Good Hope adds roughly 3,500 nautical miles to the journey, adding to concerns of delayed shipping times of two weeks, and an increase in prices to cover the higher transport costs.

Maersk, CMA CGM, MSC and Hapag Lloyd have all implemented extra surcharges to cover the costs of the longer routes, with MSC becoming the first carrier to announce a change to the European Union’s Emissions Trading System (ETS) surcharge on account of the rerouting around Africa.

ETS is the carbon tax on shipping levied by the E.U., with new charges kicking in January 2024.

On the Far East to Northern Europe route, fees will jump from $21 per dry 20-foot equivalent container unit (TEU) to $27 per TEU, while the Far East to Mediterranean trade lane will see a steeper increase from $17 per TEU to $40 per TEU.

Having continued their descent much of 2023, ocean freight rates have seen an uptick of sorts in the weeks after the Houthi rebels began attacking commercials ships in what they say is a response to the Israel-Hamas war in Gaza.

According to Drewry’s composite World Container Index (WCI), spot rates increased week-over-week by 9 percent to $1,661 per 40-foot container as of Thursday. Two Asia-to-Europe trade lanes, Shanghai-to-Rotterdam and Shanghai-to-Genoa, saw the highest rate increases across the eight major lanes analyzed by Drewry, at 16 percent and 15 percent, respectively.

From Nov. 30, composite prices have increased 30 percent per container across all trade lanes.