Indian Transport & Logistics

Maersk to restart sailing through Red Sea

"Operation Prosperity Guardian set up & deployed to allow maritime commerce to pass through Red Sea/Gulf of Aden"

Maersk to restart sailing through Red Sea
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Danish carrier Maersk will restart sailing through the Red Sea "both eastbound and westbound."

"We are currently working on plans for the first vessels to make the transit and for this to happen as soon as operationally possible. While doing so, ensuring the safety of our employees is of the utmost importance and our number one priority in handling the challenging situation in the Red Sea / Gulf of Aden area," says an official update.

Maersk said in the update that "as of Sunday, December 24, 2023, we have received confirmation that the previously announced multi-national security initiative Operation Prosperity Guardian (OPG) has now been set up and deployed to allow maritime commerce to pass through the Red Sea/Gulf of Aden and once again return to using the Suez Canal as a gateway between Asia and Europe. This is most welcome news for the entire industry and indeed the functionality of global trade."

Maersk had earlier announced diverting ships via Cape of Good Hope, and increased surcharges to account for an extra 10-21 days.

Maersk also cautioned that although security measures are in place "to enable the transit "of the Red Sea/Gulf of Aden for our vessels, the overall risk in the area is not eliminated at this stage. Maersk will not hesitate to re-evaluate the situation and once again initiate diversion plans if we deem it necessary for the safety of our seafarers."

"That is of course a somewhat vague timeline and they also state that the risk in the area is not eliminated and caution that they might change their view on the safety of passing the area if conditions change," Lars Jensen said in his LinkedIn post.

U.S. Navy shoots down drones
U.S. Central Command, in an update on December 24, 2023 had said: "USS LABOON was patrolling in the Southern Red Sea as part of Operation Prosperity Guardian, and shot down four unmanned aerial drones originating from Houthi-controlled areas in Yemen that were inbound to the USS LABOON. There were no injuries or damage in this incident."

A Norwegian-flagged M/V Blaamanen and an Indian-flagged M/V Saibaba were also attacked in the Red Sea but there were no damages.

A carrier sailing to Mangalore port in India was attacked in the Indian Ocean off the coast of Gujarat, and the Indian Coast Guard ship ICGS Vikram had escorted MV Chem Pluto to Mumbai on Sunday December 24, 2023.

An Iranian leader threatened to close off the Mediterranean Sea in retaliation for the on-going war in the Gaza Strip, NYPost reported, quoting local media outlets.

Israel and the West “shall soon await the closure of the Mediterranean Sea, [the Strait of] Gibraltar and other waterways,” Brigadier General Mohammad Reza Naqdi of the Iranian Revolutionary Guards warned.

Cost spiral continues

East Coast North America saw the brunt of rate increases amid the vessel re-routes as the lane utilises the Red Sea as a primary passage for ex-Asian cargo, S&P Global Commodity Insights said in its latest update. "Platts Container Rate 5 - North Asia-to-East Coast North America - gained $650 during the week to reach $3,250/FEU as shuffled vessels began impacting transit times and schedule reliability."

PCR13 - North Asia to West Coast North America - gained $350 on December 22 to land at $2,150/FEU after remaining rangebound all week, the update added. "Again, carrier offers were observed at rates up to $2,800/FEU without any confirmed deals. As such, it’s unclear if the rate increases will last or if macroeconomic conditions will prevent them from gaining any staying power."

Analysts at Xeneta, the leading ocean and air freight rate benchmarking and intelligence platform, feel rates could increase by 100 percent following Houthi militia missile attacks on merchant ships in the Bab-el-Mandeb Strait - a gateway to the Red Sea and Suez Canal, according to an update last week.

Peter Sand, Chief Analyst, Xeneta said: “The massive spike is already here. Ocean freight carriers are desperately trying to recoup the cost of sending vessels from the Far East to the Mediterranean, North Europe and the U.S. East Coast via the Cape of Good Hope rather than heading through the Suez Canal.

“As we saw during the Covid years when there were huge disruptions in supply chains, if there is still an urgent need to get shipments moving, then businesses will have to pay an awful lot more to do so.”

The impact of attacks on container ships transiting the Red Sea and the resulting mass diversions around the Cape of Good Hope saw Drewry’s World Container Index increase nine percent to $1,661 per 40ft container.

Shanghai to Rotterdam spot rates zoomed 16 percent week-on-week to $1,667 per 40ft while rates from Shanghai to Genoa increased 15 percent to $1,956. Drewry is expecting East-West spot rates to increase in the coming weeks due to the Red Sea/Suez situation.

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