• Global Shipping Disruption: Major shipping lines, including Maersk, Hapag-Lloyd, CMA-CGM, and Yang Ming, have temporarily suspended container shipments through the Red Sea, constituting about 40% of the global trade market. This disruption is prompted by security concerns following the targeting of Maersk Gibraltar by a Houthi missile.
• Critical Role of Red Sea: Mohamed Saad Eldin, Head of the Natural Gas Investors Association, underscores the Red Sea’s vital role in transporting oil and gas from the Middle East to Europe. Any interruption in this key trade route is expected to lead to a substantial increase in oil prices, contributing to global inflation
.• Challenges and Alternatives: Exploring alternative routes to the Suez Canal is seen as a necessity but poses challenges, as longer ship journeys may disrupt manufacturing and production due to supply chain hindrances. Companies are grappling with increased shipping costs, and the suspension of major shipping lines poses a significant challenge to global maritime trade.
A number of major global shipping lines, including Danish Maersk, German Hapag-Lloyd, French CMA-CGM, and Chinese Yang Ming, have recently announced a temporary halt to all container shipments through the Red Sea until further notice after Danish shipping company Maersk reported that its vessel, Maersk Gibraltar, was targeted by a Houthi missile, media reported.
The combined market share of vessels from MSC, Hapag Lloyd, and Maersk represents approximately 40% of global trade.
Mohamed Saad Eldin, Head of the Natural Gas Investors Association, highlighted the critical role of the Red Sea as a maritime passage for transporting oil and gas from the Middle East to Europe.
“Any disruption to this vital trade route is anticipated to result in a significant surge in oil prices, contributing to a global inflationary impact, according to Eldin.
Eldin further noted that while disturbances in the Red Sea are currently limited, there is growing concern about potential expansion by Houthi rebels in the coming period. He emphasized that exploring alternative routes to the Suez Canal would mean longer journeys for ships, leading to disruptions in manufacturing and production due to hindrances in the supply chains.
Danish shipping company Maersk reported that its vessel, Maersk Gibraltar, was targeted by a missile en route from Salalah, Oman, to Jeddah, Saudi Arabia. The crew and vessel were reported safe. Maersk expressed deep concern about the highly escalated security situation in the southern Red Sea and Gulf of Aden.
Experts attribute the current surge in shipping disruptions to a shortage of containers and a growing demand for maritime transport, putting pressure on supply chains and causing delays in goods delivery.
This situation remains a pivotal issue for global shipping, with widespread effects on supply chains and global markets.
According to experts, companies are grappling with this challenge by either passing on additional shipping costs to customers or exploring alternative shipping options.
Eldin reiterated that seeking alternative routes to the Suez Canal would lead to longer journeys for ships, causing disruptions in manufacturing and production due to hindrances in the supply chains.
A Maersk representative stated, “We have instructed all Maersk vessels in the area bound to pass through the Bab al-Mandab Strait to pause their journey until further notice.” The Bab el-Mandeb Strait, situated between the Horn of Africa and the Middle East, connects the Red Sea to the Gulf of Aden and the Arabian Sea, playing a crucial role in transporting goods, including petroleum and natural gas from the Persian Gulf.
Mohamed Moseilhi, Chairman of the Board of Directors of the Arab Federation of Chambers of Shipping and the Chairman of the Alexandria Chamber of Shipping conveyed to “Al Arabiya Business” that the suspension of shipping via French and Chinese lines, along with the halt of the Danish shipping giants Maersk and German Hapag-Lloyd last Friday, presents a significant challenge to maritime trade.
Experts highlight that importers continually grapple with rising shipping costs due to widespread increases in container fees.
A logistics expert commented, “The spike in shipping costs poses a real challenge for companies and impacts the sustainability of global trade.”
Two years ago, the Ever Given Ship accident was blocking the Suez Canal, causing more than $9 billion worth of goods, which translates to about $400 million per hour.
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