A.P. Moller-Maersk, Hapag-Lloyd Halt Commercial Shipping in Red Sea

A.P. Moller-Maersk said it is pausing all shipping through the Red Sea due to ongoing violence in the region and continued attacks on global shipping.

In a statement to Reuters on Friday morning, the company said it was halting shipping in the area.

“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, Reuters reported.

Shortly after, Hapag-Lloyd said it was also placing a pause on shipping in the region.

The sudden change serves to further disrupt international shipping in a region that has been dealing with continued attacks by Houthi rebels. A day earlier, the Gibraltar was targeted by a drone, according to a Houthi statement. Maersk denied the ship was hit by a missile, but it was the latest attack in the region.

In the statement on Friday, Maersk said the “recent attacks on commercial vessels in the area are alarming and pose a significant threat to the safety and security of seafarers.”

The U.S. on Friday said two cargo ships in the Red Sea were attacked by the Iran-backed Houthis. Both attacks came in the Bab El Mandab Strait.

Later on Friday, shipping giant Hapag-Lloyd joined Maersk in announcing a pause on shipping through the region. According to a spokesperson speaking with Sky News, the pause will last until Monday and “then we will decide for the period thereafter.”

Maersk’s pause was announced as indefinite.

Military vessels, including those from the U.S., France and Saudi Arabia, have intercepted previous missile attacks, and the U.S. has warned the Houthi rebels to stop attacking ships in the region. The U.S. was expected to announce a task force to address the situation.

The latest attacks and the decisions by Maersk and Hapag-Lloyd continue to increase the risks to the global supply chain.  

John Donigian, senior director of supply chain strategy at Moody’s Analytics, last week issued a warning about the geopolitical risks the supply chain continues to face.

“The recent Houthi attacks in the Red Sea are a stark reminder of the geopolitical risks facing global trade,” he said. “While the immediate attacks were on oil and agricultural shipments, this trade route is utilized for a multitude of products and industries that rely on timely and cost-effective shipping. If attacks become more regular and frequent, the impact on global trade and supply chains could be far-reaching.”

If ships can’t traverse the region, they will have to reroute, adding time and cost to global shipments. Ships heading from Asia to Israel are already going around Africa, adding three weeks’ time to the journey. The Israeli port of Eilat has seen the arrival of commercial ships nearly stop. 

“Given that the Red Sea is the major ocean freight lane into the Suez Canal, any further attacks that disrupt the normal flow of vessel volume has the potential to create major bottlenecks into the canal, exacerbating an already historically challenged route,” Donigan said. “With no easily accessible alternative freight lane options, it remains to be seen whether commercial vessels will continue to use this route and accept the risk of attack on an ongoing basis. If not, the only alternative routes would entail major increases in travel distance that would have significant costs and extend lead times for delivering goods. This could cause short-term supply issues until the new lead times are calculated into purchasing systems and additional product is received.”