Global Shipping Disrupted As Maersk Reroutes to Avoid Red Sea Conflicts

Denmark's A.P. Moller-Maersk reported that disruptions in container shipping via the Red Sea had impacted its entire global network. Vessels have been rerouted around Africa's Cape of Good Hope to avoid attacks, raising freight rates. The disruptions have caused congestion at several Asian ports, impacting global trade routes.

Denmark's A.P. Moller-Maersk announced on Wednesday that disruptions in container shipping via the Red Sea had spread beyond the Far East and Europe routes, affecting its entire global network.

Shipping groups have been rerouting vessels around Africa's Cape of Good Hope since December to avoid attacks by Iran-aligned Houthi militants in the Red Sea. This detour has resulted in longer voyage times and increased freight rates. Maersk warned on July 1 that the coming months would be challenging as disruptions continue.

The cascading impact extends beyond the primary affected routes, causing congestion at alternative routes and key transshipment hubs vital for trade with Far East Asia, West Central Asia, and Europe. Ports across Asia, including Singapore, Australia, and Shanghai, are experiencing delays due to ships rerouting and disrupted schedules, according to a Wednesday statement from Maersk.

Maersk noted its Oceania network was particularly impacted by congestion in Southeast Asian hubs due to equipment shortages and capacity constraints linked to the Red Sea disturbance. The delays at Southeast Asian hubs risk causing disruptions at Australian ports due to vessel bunching on arrival, resulting in longer waiting times and additional delays.

The congestion has also affected Northeast Asia and Greater China ports, leading to further delays. Despite the challenges, Maersk stated that global ocean cargo demand remains robust, and the group is working to mitigate disruptions by securing additional containers and adjusting their network and supply strategies.

Shares of the company were down 1.5% as of 0904 GMT.

(With inputs from agencies.)