Global shipping company Maersk has informed its customers and clients that surcharges will increase starting in June, as the disruption of trade along the Red Sea is now anticipated to continue into the third quarter of 2024.
The company disclosed this in a customer advisory to its clients updating them on the situation in the Red Sea and what to expect in the coming months.
The statement explained that the lingering security issues in the Red Sea is creating additional costs for the company in terms of fuel and additional charter rates due to the long distance.
Furthermore, the company noted that it has increased sailing speed, leased additional 125,000 containers, and organised its fleet to enhance capacity as part of efforts to deal with the present challenges.
It stated, “As we shared in our 6 May update, the complexity of the situation in Red Sea and the ripple effects on global supply chains have intensified in recent months. This has caused industry-wide disruptions. We now expect that these disruptions will continue into the third quarter of 2024.”
“To help with the additional costs, some surcharges will increase temporarily. You will see relevant surcharges on your latest invoices, some higher than last month. Please know that we will continue to review the surcharges regularly and keep you updated on changes. You can also find the latest information on our dedicated surcharges page on Maersk.com.”
Backstory
In October 2023, Houthi Rebels in Yemen in solidarity with Palestinians against Israel’s invasion of Gaza began attacking merchant vessels sailing through the Red Sea. The continuous launching of missiles across the vital global trade route pushed shipping companies like Maersk, AP Hapag-Lloyd, and MSC to divert their vessels towards the longer route through the Cape of Good Hope in South Africa.
- These ships are now taking an alternative route around the Cape of Good Hope in South Africa, which adds 10 to 14 days to their travel time. This extended journey results in higher fuel costs due to the increased distance travelled.
- The Red Sea is a crucial global trade route, facilitating approximately 12% of global shipping traffic and connecting Europe, the Middle East, and parts of Africa.
What you should know
- A report by Afrexim Bank on the impact of the disruption of global trade in the Red Sea on macroeconomy stability in Africa stated that it could lead to higher inflation levels and more hawkish monetary policy stance among Central Banks in the continent.
- According to the report, the increased freight costs will not only affect the prices of consumer goods across the continent but will also exacerbate the already high inflation levels.