The Red Sea Shipping Situation (Customer Advisory)

Posted by Admin

Sunday 31 Dec 2023 : Major carriers have adopted different approaches to sailing through the Red Sea. Maersk and CMA CGM announced around Christmas to proceed with voyages via the waterway under naval protection. Nonetheless, Maersk had then acknowledged that the overall risk in the area is “not eliminated” in spite of the security measures, and that it would not hesitate to re-evaluate the situation and initiate diversion plans if necessary.

It is unclear if CMA CGM will proceed using the Red Sea or adopt a wait-and-see approach.

Major shipping lines operating in the Red Sea have been trying for weeks to avoid attacks from Yemeni Houthi rebels who have been targeting merchant vessels in the Red Sea in late November in response to Israel’s bombardment of Gaza.

In contrast, the world’s largest boxship line Mediterranean Shipping Company and Hapag-Lloyd, whose vessels had been attacked in the Red Sea by the rebels, rerouted ships booked for Suez transit via Africa instead. Hapag-Lloyd said it considered the waterway still too dangerous to pass.

In general, concrete information has been scarce, with shipping agents and logistics companies reluctant to volunteer updates, and only providing “estimates” in case they are unable to deliver the cargo on time. It is crystal clear that there will be extra costs (because of the Red Sea delays), but nothing was said about how much by shipping lines, who have been asking freight forwarders and customers to check their websites on a vessel-by-vessel basis daily.

We are fast-forwarding planning of orders for 2024, as we will have shipment delays,” said founder and director Roderic Proniewski of wine distributor Asia Wine Network. He has been informed that as its shipments from France, Italy, Spain, Portugal and Austria are taking the long route around Africa, they will take an additional 15 to 19 days to arrive.

The Red Sea attacks are a reminder of the need to build supply chain resilience, noted industry players.

“In the face of a rising tide of unprecedented events, the European Chamber of Commerce in Singapore remains vigilant in its commitment to supporting the interests of the European business community,” said executive director Nele Cornelis.

Asia Wine Network’s Proniewski said: “It seems that now we have to be ready for uncontrollable situations on a yearly basis.” The silver lining, he added, is that the issue affects everyone in the industry equally.

Giacomo Marabiso from the Italian Chamber of Commerce in Singapore noted that it will be important to reconsider supply chains for the future, with production within the region being a sustainable and lower-risk option. “The recent disruption at Suez Canal serves as a stark reminder of the challenges our member companies may encounter,” she added.