News - Maersk: Red Sea shipping disruption will hit global economy

The boss of shipping giant AP Moller-Maersk has warned it could take months to reopen the crucial Red Sea trading route, risking an economic and inflationary hit to the global economy, companies and consumers, the Financial Times reported. Vincent Clerc, Maersk’s chief executive, told the Financial Times on Thursday that the closure of the Red Sea to most container shipping after a series of attacks from Yemen’s Houthi militants was “brutal and dramatic.” “It’s unclear to us if we are talking about re-establishing safe passage [of ships] into the Red Sea in a matter of days, weeks or months... It could potentially have quite significant consequences on global growth,” he said. A Maersk vessel was attacked in mid-December, causing the Danish group to suspend journeys through the Red Sea, a crucial link between Asia and Europe. The group restarted trips a few days later after a US-led military coalition tried to create safe passage, but it suffered a further attack at the end of December. Last week, Maersk said it would divert ships from the Red Sea around Africa “for the foreseeable future.” Diverting container ships via the Cape of Good Hope adds about 13,000km in distance for an Asia-Europe round trip, and hundreds of dollars per container, Clerc said. Maersk’s fuel bill will be 50 percent higher as a result of ships taking the longer route.  Maersk’s share price has risen by a quarter in the past month as container freight rates have shot up.