Indian Transport & Logistics

Maersk, Hapag halt Red Sea movements after attacks

After Panama Canal shock, the terror attacks on container ships can disrupt supply chain in 2024

Maersk, Hapag halt Red Sea movements after attack
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Shipping majors Maersk and Hapag-Lloyd have stopped their carriers from entering the Red Sea after repeated attacks by Yemen-based Houthi rebels.

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

"Following the near-miss incident involving Maersk Gibraltar and yet another attack on a container vessel, 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.

"Ensuring the safety of our employees is of the utmost importance and our number one priority in handling this challenging situation. We continue to closely monitor the situation retrieving all available intelligence on the security situation in the area. We are committed to ensuring the best possible stability of our customers’ supply chains, and we are working closely with all our logistics teams and are taking steps to minimise impacts to customers."

Hapag spokesperson Nils Haupt said "some of the company’s ships were asked to pause and drift outside the strait, a narrow stretch of water that links the Indian Ocean to the Red Sea. It’s also a key passage that enables ships to travel to Egypt’s Suez Canal," The Wall Street Journal reported.

“It’s very worrisome because ships heading to the Suez have to pass through the strait,” says Haupt. “We are stopping some ships, but there is no general rule yet, though this could change.”

At least eight ships have been attacked in recent weeks in the Bab el-Mandeb Strait, The WSJ reported.

The World Shipping Council (WSC) issued a statement saying "is deeply alarmed and concerned about the escalating security crisis unfolding in the Red Sea region. The disturbing surge of attacks on vessels poses an imminent threat to the safety and lives of the seafarers navigating these waters.

"The right of freedom of navigation stands as a fundamental right under international law, and must be safeguarded. The World Shipping Council urgently calls upon the global community to take decisive action to protect seafarers and freedom of navigation.

"The time for resolute international engagement is now."

The attacks, it seems, is in response to the Israel-Palestine conflict over the October 7 terror attack by Hamas and Israel's retaliatory attacks on Gaza that Israel claims will "take months to destroy Hamas."

Israeli carrier ZIM, while increasing rates to Israeli ports, had this to say about the current situation: "Over the past week, we have witnessed an increase in the level of the threat, and the above new rates, effective from December 13, are necessary in order to maintain our current level of services and reflect the steps we take to ensure the safety of our crews, vessels, and customers’ cargo, each of which remains our paramount concern.

"We continue to closely monitor and evaluate the situation on a daily basis and will promptly update you on any future developments."

Approximately 30 percent of container volumes transit the Suez Canal and make up about half the traffic through the canal by weight, FreightWaves reported, quoting Ben Nolan, analyst, Stifel. “Rate increases are often announced but not usually successful in a loose market. However, if ships do avoid the Suez Canal, the market could easily tighten enough to support the rate increase.”

Risks to container ships and their crews are escalating by the day in the Red Sea — and with that rising danger comes the prospect of higher shipping rates, the report added.

"It’s not just container freight rates that stand to gain from Red Sea disruptions. The need for more ships to serve longer routes could also support future demand and leasing rates in the ship charter market."

Flexport, meanwhile, "is assessing the situation with carriers and gauging how much it will delay transit (especially if vessels opt to go through Cape of Good Hope)."

Grim scene at Panama Canal
Given the grim scenario at the Panama Canal, which is regulating carriers due to drought conditions, the new geo-political developments can add to "risks" that need to be managed by shippers.

Panama Canal reported the driest October since 1950 i.e 73 years due to the drought caused by the El Niño phenomenon that continues to impact the reservoir system.

The Panama Canal has, therefore, announced reservation slots to maintain a competitive draft from November until February with slots declining to 18 in February 2024 from 22 in December 2023.

Closure of Suez Canal?
“At this stage, it is 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," says Peter Sand, Chief Analyst, Xeneta.

“While I believe most ships will continue to transit the Suez Canal, we are already seeing reports of ocean freight liner operators and owners choosing to re-route vessels away from the region following the attacks.

“The importance of the Suez Canal to global supply chains means even a small disruption can have big consequences.”

How serious is the threat?
Sand adds that piracy in the Gulf of Aden has been seen for many, many years. "In fact, 10 years ago, this region was rampant with piracy and it was deemed a high risk area in marine insurance terms. By the end of 2022, the situation seemed to have calmed down and the ‘high risk’ categorisation was removed.

“Unfortunately, the risk has escalated significantly in recent months with numerous missile attacks by Houthi militia. Any ship transiting the Suez Canal must also sail through the Red Sea and Gulf of Aden and Houthi militia have stated any vessel is a target.

“However, I still believe most ships will continue to transit the Suez Canal despite this threat, just as they did when piracy was such a high risk.”

Alternatives to the Suez Canal?
“If ships do re-route away from the Suez Canal then it will cause disruption, especially given the ongoing restrictions due to drought at the Panama Canal," adds Sand.

“The only real alternative to the Suez Canal is going around the Cape of Good Hope, which adds up to 10 days sailing time on an Asia to North Europe or East Mediterranean service. Some ocean freight liner operators may feel this is the best option given the risk to their vessels and crews in the Red Sea and Gulf of Aden.”

Longer to arrive but will it cost more?
There is always the risk rates will be impacted in such a scenario, says Sand. "Whenever there is uncertainty, there is the opportunity for carriers and forwarders to increase rates.

“Around 50 vessels transit the Suez Canal every day of which more than a quarter are container ships. Following the Ever Given incident in 2021, we saw rates between Far East and North Europe sky-rocket. I am not suggesting anything on that scale, especially because that was also during the pandemic. I would expect some kind of over-reaction, at least in the short-term where rates jump on all trades which utilise the Suez Canal. Whether that is a 5, 10, 30 percent increase we will not know until we see how the situation evolves in the next few months. We could even see rates double from today’s level if the situation continues to escalate.”

Xeneta had raised the potential risks of "black swan" events in its Freight Outlook 2024, and Sand adds: “Of course, no one can predict drought or missile attacks but the possibility of incidents such as this occurring should never be too far from the thoughts of anyone involved in the ocean freight shipping industry."

Jyothi Shankaran

Jyothi Shankaran

Associate Editor, STAT Media Group. He has worked with IndiaSpend, Bloomberg TV, Business Standard and Indian Express Group. Jyothi can be reached at

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