As the Red Sea crisis spans into its third month, liners continue to endure vessel shortages and port congestions worldwide, according to prominent industry executives.
Since naval violence erupted in the Red Sea late last year, which forcibly diverted carriers from their heavily relied-upon Asia-Europe route, including passage through the Suez Canal, shipping companies have faced scheduling issues, resulting in vessels arriving at their destinations unpredictably, as reported by the Financial Times.
Subsequent redirections ensued throughout the shipping world which saw many vessels reroute around the Cape of Good Hope to arrive at their destination while circumventing the hostility in the Red Sea. The solution was not free from complications, however, as the revised route added up to two weeks to each voyage between Asia and North Europe, thereby stifling supply chains for several countries.
Jeremy Nixon, Chief Executive of Japan’s Ocean Network Express (ONE) told the Financial Times: “Everybody is struggling with schedule integrity and therefore we’re getting berthing clashes in a number of ports.” He later touched on the compounded pressure felt particularly by ‘hub’ ports. “What we see is increased volumes into the hub ports in Asia and the hub ports in the Mediterranean.”
According to Nixon, Singapore, Dubai, and ports along the Gibraltar Strait have seen dramatic increases.
READ: ONE suspends Red Sea service
The shares of Denmark’s Maersk, the second-largest container line globally, plummeted this past month, compelling its CEO to caution that shipping overcapacity could put the company’s earnings ‘under pressure’, the Financial Times reported. Nixon, however, downplayed the suggestion having cited that ONE, conversely, had too few ships to sustain its weekly services, reported the Financial Times.
The 102-day route around the Cape of Good Hope requires the deployment of 16 vessels to sustain a weekly service from what would typically be carried out by 12. In attempts to mitigate further delays, Nixon added that ONE’s ships were travelling at 10-15 per cent faster than their normal speed. “There are simply not enough ships available globally… to cover these much longer extended transit times,” he explained to the Financial Times.
READ: Xeneta forecasts rise in ocean freight rates amid Red Sea crisis
Despite this, the anticipated growth in world fleet capacity for 2024 is approximately 8 per cent, almost doubling the expected demand growth of about 3 per cent. These figures seemingly posit the potential for overcapacity which could lead to a depression of rates that liners could charge. Nixon, nevertheless, put these figures down to a short-term materialisation of timely investments put towards vessels run on cleaner fuels, before the enactment of new emission rules expected from 2027 onwards, reported the Financial Times.
“I’m not so much of the view that there’s a huge oversupply in the container shipping industry,” Nixon asserted. “We’re building a bit ahead of ourselves so that we’ll have the greener vessels and greener investments in time.”
Late last month, a leading provider of Research & Analysis, Data Services, and Advisory Services within the global supply chain industry, with a strong focus on container shipping, Sea-Intelligence, predicted that maritime companies’ CO2 emissions would rise as a result of the ongoing Red Sea crisis.
