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Houthi Attack Expansion Drives Shipping Delays

The “risk zone” for shipping has expanded, one of the world’s largest ocean carriers said this week (The New York Times, subscription).

What’s going on: “Since late last year, the Houthis have been attacking ships in the Red Sea, which cargo vessels from Asia have to travel through to reach the Suez Canal. This has forced ocean carriers [such as Maersk] to avoid the sea and take a much longer route to Europe around the southern tip of Africa. But in recent weeks, the Houthis have been trying to strike ships making that longer journey in the Indian Ocean.”

  • Because going around Africa makes shipping times longer, Maersk said it has increased its number of freight-carrying vessels to ensure on-time deliveries.
  • The threat of Houthi attacks “has forced our vessels to lengthen their journey further, resulting in additional time and costs to get your cargo to its destination for the time being,” Maersk, which has a market share of about 17%, said in a note to customers Monday.

What it means: Higher costs borne by shipping lines—including an increase in fuel use—will translate to higher surcharges on shipping invoices to customers.

  • And while the cost of sending a container from Asia to northern Europe was down last week from recent highs and considerably lower than pandemic levels, adding ships and equipment to that route is likely to have resulted in a decline in sector-wide capacity of between 15% and 20%, Maersk said.
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