Coming months challenging for shipping, says Maersk CEO

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Coming months challenging for shipping, says Maersk CEO
Video screengrab from Maersk CEO Vincent Clerc's LinkedIn page.
  • The coming months will remain challenging for carriers and businesses alike with the Red Sea situation seen stretching into the third quarter of this year
  • Maersk CEO Vincent Clerc spoke on the challenges caused by continuing attacks on ships plying the Red Sea/Gulf of Aden on logistics and supply chains
  • He noted the “massive impacts” of the Red Sea situation which began in December 2023

The coming months will remain challenging for carriers and businesses alike with the Red Sea situation seen stretching into the third quarter of this year, according to A.P. Moller-Maersk CEO Vincent Clerc.

Clerc recently spoke with customers at an online event on the challenges caused by the continuing attacks on ships plying the Red Sea/Gulf of Aden by Houthi rebels, especially for logistics and supply chains.

For now, he said Maersk ships are diverting around Africa via the Cape of Good Hope. He admitted the situation is hard for both carriers and businesses that need their cargo transported.

“We need to make sure that we stay close…as we handle the new set of circumstances that continues to unfold before us,” Clerc said, adding that he knows it is difficult for the company’s customers. “We know it puts you under a lot of pressure.”

He noted the “massive impacts” of the Red Sea situation which began on December, last year.

The impacts of the situation were somewhat alleviated by the demand peaks of the Lunar New Year in the first quarter, but since April and May the challenges have intensified.

Clerc said one reason freight rates are temporarily higher were the cargo journeys being lengthened and capacity squeezed. He said Maersk has taken on the additional costs knowing that many will remain after the Red Sea situation normalizes.

As an example, he said ships cannot be chartered for a few months to fill current gaps. Instead, carriers need to sign up to several years at higher charter rates.

Said Clerc: “Today, all ships that can sail and all ships that were previously not well utilized in other parts of the world have been redeployed to try to plug holes. It has alleviated part of the problem, but far from all the problems across the industry.”

He admitted it is not known how much of the added costs will be recovered and for how long. But he insisted that the higher rates are “of a temporary nature.”

Clerc said he expects normal sailing routes to resume “in the near future.”

Meantime, Maersk will only return to sailing via the Red Sea/Gulf of Aden when the safety of seafarers, vessels, and cargo are guaranteed.

One issue that ships need to address are their arriving at some ports at similar times, thereby causing congestion.

More importantly, governments which need to have a stronger presence in the area have not been as successful in making their presence felt, he said. With not enough action, global inflation would be re-ignited, he added.

READ: Shipping industry grapples with capacity challenges, strong demand — Drewry