Maersk, Hapag-Lloyd Suspend Shipping Through Red Sea After Houthi Attacks

Glenn Taylor
·4 min read

A.P. Moller-Maersk and Hapag-Lloyd have temporarily halted their vessels from traversing through the Bab el-Mandeb Strait into the Red Sea Friday after both ocean carriers have endured attacks by Yemen-based Houthi militants.

The strait links the Indian Ocean to the Red Sea, and is a key passage that enables ships coming from Asia to travel to Egypt’s Suez Canal.

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An estimated 12 percent of global trade flows through the Suez Canal, a vital gateway for any business seeking to ship product via ocean freight from Asia to Europe, or for those looking to reroute shipments away from the backlogged Panama Canal.

Maersk has put all vessel movement bound to pass through the strait on hold “until further notice,” the company said. Hapag-Lloyd said it would suspend voyages in the area until Monday, and will then decide whether they want to continue the suspension.

“We are deeply concerned about the highly escalated security situation in the southern Red Sea and Gulf of Aden,” Maersk said in a statement. “The recent attacks on commercial vessels in the area are alarming and pose a significant threat to the safety and security of seafarers.”

On Thursday, it was reported a missile was fired at the Maersk Gibraltar vessel while en route from Salalah in Oman to Jeddah in Saudi Arabia. The missile did not strike the ship.

A Hapag-Lloyd spokesperson confirmed that the 15,000 20-foot equivalent unit (TEU) vessel Al Jasrah was attacked early Friday while sailing close to the coast of Yemen. The ship was sailing on the Asia-to-Mediterranean “MD2” service route. No crew members were injured.

Also on Friday, a Mediterranean Shipping Company-operated vessel, the 2,546-TEU MSC Palatium III, was struck. The vessel’s master reporting an explosion on board that resulted in a fire that was extinguished.

The Iran-backed Houthi rebels have been attacking cargo ships in the Red Sea in recent weeks—particularly vessels that are claimed to be connected to Israel—in response to the war in Gaza.

In a statement, the International Chamber of Shipping (ICS) called the Houthi attacks “unacceptable acts of aggression” and “flagrant breach of international law.”

“ICS deplores the actions of the Houthis in the strongest terms and calls for the immediate cessation of these attacks,” the global trade association for shipowners and operators said. “States with influence in the region should, as a matter of urgency, work to stop the actions of the Houthis in attacking seafarers and merchant ships, and de-escalate what is now an extremely serious threat to international trade.”

The potential for future attacks could have an impact on global trade if the Suez sees a slowdown, like when the Ever Given container ship got stuck in the waterway two years ago and brought traffic to a standstill for six days. That blockage resulted in a holdup of $9.6 billion in goods per day.

In a Q&A posted Friday morning, Peter Sand, chief analyst at ocean and air freight analytics platform Xeneta, said it was “highly unlikely the Suez Canal will close, but if there are further significant escalations then we cannot rule it out completely, even if it is just for a few days.”

Sand pointed out that the “only real alternative” to the Suez Canal is going around Africa’s Cape of Good Hope, which can add up to 10 days sailing time on an Asia-to-North Europe or Asia-to-East Mediterranean service.

Ironically, the stocks of various container shipping firms including Maersk and Hapag-Lloyd have leapt in the wake of the attacks, presumably on the grounds that the rerouting of ships around Africa would increase freight rates.

Since Tuesday, Maersk’s stock price has increased nearly 16 percent, while Hapag-Lloyd’s jumped almost 22 percent.

Sand acknowledged freight rates on routes from the Far East to North Europe could double from today’s level if the situation continues to escalate.

“There is always the risk rates will be impacted in a scenario such as this. Whenever there is uncertainty there is the opportunity for carriers and forwarders to increase rates,” Sand said. “I would expect some kind of overreaction, at least in the short term, where rates jump on all trades which utilize the Suez Canal. Whether that is a 5, 10 [or] 30 percent increase, we will not know until we see how the situation evolves in the next few months.”

As of Thursday, spot freight rates across the major global trade lanes are down 28 percent from year-ago figures to $1,521 per 40-ft container, according to Drewry’s World Container Index (WCI).

In response to the Houthi attacks, the U.S. is expected to announce a multinational task force that will start operating in the Red Sea to deter the rebels from further attacks and counter them, according to a Thursday report from Bloomberg.