Shipping pause in Suez Canal could cause months of delays - Massey transport expert

Sunday, 07 July 2024

A supply chain expert says if shipping attacks escalate in the Red Sea, shipping prices are likely to increase, and there could be major delays worldwide.

Reuters reported that shipping companies Maersk, MSC, CMA-CGM and Hapag-Lloyd had suspended all journeys through the Red Sea and Suez Canal, after attacks by Houthi rebels from Yemen.

Yemen's Iranian-backed Houthi movement has been attacking vessels in response to the Gaza war on a route that allows East-West trade, especially of oil, to use the Suez Canal to save the time and expense of circumnavigating Africa. War risk insurance premiums have risen as a result.

The Liberian-flagged MSC Palatium III was attacked on Friday with a drone in the Bab al-Mandab Strait off Yemen, at the southern end of the Red Sea, according to the Houthis.

No injuries were reported, but the vessel suffered some fire damage and was taken out of service, MSC said in a statement. Another Liberian-flagged vessel, Hapag Lloyd's Al Jasrah, was hit by a missile, the US military said.

A spokesperson for Danish shipping company A.P. Moller-Maersk told Reuters on Friday it would pause all container shipments through the Red Sea until further notice.

"Following the near-miss incident involving Maersk Gibraltar yesterday and yet another attack on a container vessel today, 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," the company said in a statement.

Massey University supply chain management senior lecturer Carel Bezuidenhout said when the Ever Given container ship got stuck in the Suez for seven days in 2021, it caused delays for months.

"The impacts of that on the global logistics [network] took months to ... work the ripples through the system."

Dr Bezuidenhout said about 30 percent of ships from Singapore go through the Suez Canal, and pausing those trips could have a ripple effect.

"There could be significant disruptions in places like Singapore [and] Hamburg where you have quite a bit of Red Sea traffic coming in and coming out of those ports."

Maersk on Thursday had told Reuters its vessel Maersk Gibraltar was targeted by a missile while travelling from Salalah, Oman, to Jeddah, Saudi Arabia and that the crew and vessel were reported safe.

Earlier on Friday, Maersk denied a claim by Yemen's Iran-aligned Houthi movement that the militia had struck a Maersk vessel sailing towards Israel.

"The vessel was not hit," a Maersk spokesperson told Reuters in an emailed statement following the Houthi claim.