Tyler Durden
"Thursday, Jan 11, 2024 - 07:40 PM
President Biden's efforts to stop Iran-backed Houti attacks on commercial shipping routes in the Red Sea continue to face significant challenges. The boss of shipping giant AP Møller-Maersk disclosed to the Financial Times in an interview that reopening the critical waterway could take months instead of weeks.
Vincent Clerc, Maersk's chief executive, said the weekly drone and missile attacks on container ships have been 'brutal and dramatic.' He said vessels have been rerouted to the Cape of Good Hope as this 1- 2 week detour adds higher shipping costs because of reduced container capacity and increased fuel usage.
'It's unclear to us if we are talking about re-establishing safe passage into the Red Sea in a matter of days, weeks or months . . . It could potentially have quite significant consequences on global growth,' he said.
As of Thursday morning, AIS vessel tracking data via Bloomberg shows two container ships in the highly contested Red Sea waters, with destinations for Europe and North America. Most of these vessels have been rerouted to the Cape of Good Hope.
Last week, Maersk said it would divert ships from the Red Sea around Africa 'for the foreseeable future.' The shipper has failed to restart operations in the critical waterway that links Europe and Asia after its vessels were attacked last month.
Clerc said Cape of Good Hope adds about 8,000 miles in distance for an Asia-Europe route on a round trip basis. He said the extra distance has made Maersk's fuel bill 50% higher. He warned that if the Red Sea route is not restored soon, it could threaten 'logistics and global supply chains.'
'We are urging the international community to mobilize and do what it needs to do to reopen the [Bab-el-Mandeb] strait. It is one of the main arteries of the global economy, and it is clogged right now,' he said.
He added: 'It could have wider-ranging consequences not only for the industry but for end consumers, product availability, and the global economy as a whole.'
Maersk's inability to restart the Red Sea route directly reflects Biden's faltering Operation Prosperity Guardian mission to safeguard commercial vessels in the region with US warships."