Security threats to commercial shipping in the Red Sea are not abating, they are escalating instead, and disruptions to maritime trade are expected to last up to a year, according to some of the biggest shipping companies in the world.
Many container and tanker operators have been avoiding the Red Sea/Suez Canal route and diverting vessels via the Cape of Good Hope in Africa since the Iran-backed Houthi militants in Yemen escalated early this year missile attacks on commercial ships in the Gulf of Aden, the Bab el-Mandeb Strait, and the Red Sea.
"We've not seen the level of threat peak, to the contrary," A.P. Moller-Maersk chief executive Vincent Clerc told Bloomberg TV in an interview on Thursday.
"The amount or the range of weapons that are being used for these attacks is expanding and there is no clear line of sight to when and how the international community will be able to mobilize itself and guarantee safe passage for us," Clerc added.
In its Q4 report today, the world's top container shipper Maersk said that "High uncertainty remains around the duration and degree of the Red Sea disruption with the duration from one quarter to full year reflected in the guidance range."
"[W]hile the Red Sea crisis has caused immediate capacity constraints and a temporary increase in rates, eventually the oversupply in shipping capacity will lead to price pressure and impact our results," Maersk noted.
Following the warning of depressed freight rates after the Red Sea situation is defused, shares in Maersk (CPH: MAERSK-B) plunged by 17% in the early afternoon in Copenhagen.
Another shipping firm, Norden, also said today that the Red Sea situation seems to be getting worse.
"You need to have a de-escalating situation, and we are not at that point yet," CEO Jan Rinbo told Bloomberg.
"If anything it just seems to escalate."
Earlier this week, Japanese shipping giant Mitsui OSK Lines warned that shipping disruptions might extend for up to a year, indicating that expectations for short-term disruptions are quickly fading.
By Charles Kennedy for Oilprice.com
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