Industry News

Congestion caused by climate disruptions such as El Niño and major storms are limiting offered capacity and are behind some carriers’ decisions to return to the shorter route to Europe via the Suez Canal.

According to Linerlytica data port congestion in Asia is now higher, at 4.3 million teu, than during the Covid pandemic peak, which saw 4.0 million teu ‘stranded’.

By taking the much shorter route via the Bab el Mandeb strait, the Red Sea and Suez vessel operators are taking a risk with hostilities in the Middle East periodically increasing with the Iran backed Houthi Movement still a threat to passing ships off the coast of Yemen.

However, with the Cape of Good Hope diversions absorbing between 5% and 7% of global capacity, 1.7 million to 2.4 million teu, the need to release capacity is becoming hard to resist.

“Maersk, in particular, [is] still scrambling for additional tonnage,” said Linerlytica in its weekly market report, “This has been one of the main drivers behind Maersk’s decision to risk an early return to the Red Sea even though the majority of carriers are still reluctant to do so, including its Gemini Cooperation partner Hapag-Lloyd.

The Danish carrier is by no means the only liner shipping company to test the waters with CMA CGM leading the way, and Wan Hai Lines, Cosco Shipping and most recently MSC all taking the plunge.

French operator CMA CGM made 15 transits through the Suez route to Maersk’s 11 and these two lines, along with MSC have operated vessels in both north and southbound directions. Wan Hai and Cosco have, so far, made only northbound transits.

Even with the capacity squeeze through burgeoning delays freight rates on the Asia to Europe routes have failed to recover with even the alternative North Sea Route receiving a “Lukewarm response” from shippers, said the consultant.

Source: https://www.seatrade-maritime.com/containers/container-lines-edge-towards-full-suez-and-red-sea-return?