Indian Transport & Logistics

Houthis attack 2 Maersk vessels in Red Sea

Following escalation of risk, US subsidiary of Maersk is suspending transits in the region until further notice

Houthis attack 2 Maersk vessels in Red Sea
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Iranian-backed Houthi terrorists fired three anti-ship ballistic missiles from Houthi-controlled areas of Yemen toward the U.S.-flagged, owned, and operated container ship Maersk Detroit, transiting the Gulf of Aden on January 24 at approximately 2.30 p.m (Sanaa time).

"One missile impacted in the sea. The two other missiles were successfully engaged and shot down by the USS Gravely (DDG 107). There were no reported injuries or damage to the ship," says the latest update from the U.S. Central Command on X.

Maersk, in a statement, confirmed that "two US-flagged vessels, Maersk Detroit and Maersk Chesapeake, were part of a scheduled U.S. Navy accompaniment for a northbound transit of the Bab el-Mandeb today (January 24, 2024). While enroute, both ships reported seeing explosions close by and the U.S. Navy accompaniment also intercepted multiple projectiles. The crew, ship, and cargo are safe and unharmed. The U.S. Navy has turned both ships around and is escorting them back to the Gulf of Aden."

The vessels are operated by Maersk Line (MLL), a U.S. subsidiary. "These vessels are enrolled in the Maritime Security Program and Voluntary Intermodal Sealift (VISA) with the U.S. Government. The safety of our crews is of utmost importance. Following the escalation of risk, MLL is suspending transits in the region until further notice."

Earlier in the day (January 24) at 2.30 am (Sanaa time), U.S. Central Command forces conducted strikes against two Houthi anti-ship missiles that were aimed into the Southern Red Sea and were prepared to launch.

"U.S. forces identified the missiles in Houthi-controlled areas of Yemen and determined that they presented an imminent threat to merchant vessels and the U.S. Navy ships in the region. U.S. forces subsequently struck and destroyed the missiles in self-defence. This action will protect freedom of navigation and make international waters safer and more secure for U.S. Navy vessels and merchant vessels.," says a post on X.

United Kingdom Maritime Trade Operations reported three explosions 1-5 nm from a merchant vessel in the Bab El Mandeb 33 NM East of Assab, Eritrea. "Master reports no damage to the vessel and crew are reported safe at present. Authorities are investigating."

Vessel movements for the large CMA CGM vessels indicate no change to their policy of still using the transit, write Lars Jensen in his latest LinkedIn update. "This also means that customers with other carriers who are sharing space with CMA CGM will see their cargo go through the region, and hence need to double-check their insurance coverage."

Uncertainty continues
It is the beneficial cargo owners (BCOs) who ultimately bear the greatest hardship, adds Vir Kotak, Founder, Propelor, a digital freight forwarder. "Currently, there is a noticeable trend where many BCOs are postponing their bookings, cautiously awaiting a semblance of stability before making informed decisions. Consequently, stocks in various destinations are anticipated to dwindle, necessitating a return to addressing these concerns. However, the prevailing higher rates contribute to uncertainty about delivery times, creating a considerably more unstable operating environment for everyone involved."

Rates to continue rally till Feb
Early indications suggest ocean freight shipping rates are set to increase further in early February amid the ongoing Red Sea crisis, according to data released by Xeneta.

From the Far East to Mediterranean, market average short term rates are set to increase 11 percent by February 2, 2024 to $6,507 per FEU. This is an increase of 243 percent since the Red Sea crisis escalated in mid-December, the update added.

"Rates from the Far East to North Europe are set to rise by 8 percent by February 2 with a market average of $5,106 per FEU. This is an increase of 235 percent since mid-December."

Peter Sand, Chief Analyst, Xeneta says: “Carriers are trying to readjust services to make up for the additional sailing time around the Cape of Good Hope. For example, they are cutting journeys short, missing port calls and increasing sailing speed. However, despite this, the early data from Xeneta suggests rates will continue to rise as we head into February.

“The Red Sea crisis is causing a capacity issue rather than a demand issue as we saw during the pandemic. It is the massive uncertainty in the market which has brought imbalance and instability. During times like this, you can only keep your cool if you are well informed.

“We are hearing from Xeneta customers that carriers are now no longer offering the most expensive premium services which guarantee freight will be shipped during periods of extreme pressure on available capacity.

“This may suggest there is a waning demand for this level of service because the urgency is fading from the shipper side, or perhaps it is because capacity is available after all, despite the chaos caused by carriers pausing transits through the Suez Canal.”

Vir Kotak, Founder, Propelor

BCOs have firsthand experience in navigating post-Covid shipping challenges, says Kotak of Propelor. "Reflecting on the preceding two decades of lean supply chain practices, especially pre-Covid, many of these entities, particularly larger corporations, adeptly restructured their systems. They systematically dismantled existing frameworks, adding a level of resilience to address potential issues such as those surfacing today. While I don't anticipate a drastic shift comparable to the changes prompted by the Covid crisis, many have proactively adapted their systems to incorporate contingencies for ongoing challenges.

"The roller coaster ride persists, that's one way to describe it. Shipping clients faced significant challenges entering the 2000s. Unexpectedly, the crises they grappled with transformed into lucrative opportunities. Subsequently, an excess of capacity posed challenges in the latter part of 2023. Now, we find ourselves back in another challenging period, especially for shipping lines. Dealing with attacks on their ships and navigating disruptive events is undoubtedly demanding. So, it's akin to being back on the roller coaster. Success hinges on how effectively everyone manages to weather the ride, holding on tightly and striving to minimise disruptions for all involved."

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