Shipping Concerns Grow as Maersk and Hapag-Lloyd Suspend Routes
Container shipping continues to reel as the war in the Persian Gulf reaches its first week, and U.S. and Israeli officials are saying it could continue for weeks. Against that backdrop, an announcement by Maersk and Hapag-Lloyd that the two liner companies were suspending key routes is drawing wide attention as analysts speculate on the full impact on the container segment.
“Following our latest risk assessment and operational review and considering the escalating conflict affecting safe navigation in the Gulf region, we have made the decision to temporarily suspend,” Maersk wrote to customers, detailing the impact to routes connecting the Far East to the Middle East and connecting the Middle East to Europe. It also said it was suspending calls in Jebel Ali in the United Arab Emirates on a route connecting Northern Europe to the Middle East.
Hapag released alerts to customers showing its Asia to Northern Europe route going around South Africa. A route through the Mediterranean with its hubs in Egypt and Morocco will transit the Suez Canal but will make a “U” turn at Jeddah, Saudi Arabia.
News of the route suspensions follows earlier reports that shuttle routes in the Persian Gulf were suspended and a suspension of bookings by most of the major carriers for a broad range of routes. CMA CGM, for example, at the beginning of the week said it was rerouting all ships away from transits of the Suez Canal, while carriers including CMA CGM, Ocean Network Express, Hapag, MSC, and others all announced changes and suspensions. MSC has highlighted an overland route as a means of moving containers for the impacted region.
Analysts differ on just how many boxes are impacted, with some estimates as high as 250,000 or more TEU stranded across the region. Hapag alone has cited 50,000 TEU as being impacted, and MSC is invoking a 19th-century seafaring law, the Financial Times reports. It writes that MSC will be taking containers to available safe ports and begin offloading them. Customers will face an $800 fee per box plus the cost of retrieving their errant cargoes.
Similarly, there is disagreement on just how many vessels are being impacted. CEO of ONE, Jeremy Nixon, said there could be 100 vessels in the region around the Strait of Hormuz. The Financial Times writes it is about 90 containerships, while analysts at Xeneta projected higher numbers. It writes that the war has left 147 containers sheltering in the Persian Gulf.
The Financial Times, in a report on Friday, looks at the repercussions, highlighting that many of the containers are refrigerated foods. Analysts have noted that many of the countries depend on food imports, with one unconfirmed report saying Dubai would run out of some food items in as little as 10 days.
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Much of the focus is on the idled tankers and the skyrocketing fuel prices. The FT, however, notes there are about 15 car carriers stranded in the Gulf with another 20 waiting to enter or heading toward the region. It says there are even four livestock carriers, according to data from S&P Global, with cargoes of animals en route to the Middle East. The animal welfare NGO Robin des Bois (Robin Hood) warns that the number is much higher. It reports six carriers are already at various points across the Middle East or Eastern Mediterranean, and seven more have loaded and are sailing towards ports in Saudi Arabia, Jordan, Israel, and Lebanon, as well as Libya.
For now, the companies are expected to struggle to reroute and manage efforts to limit broader disruptions to supply chains. Analysts, however, are expecting a ripple effect, with congestion and ports becoming overloaded with containers as the conflict stretches on.
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