Maersk CEO Vincent Clerc discusses Red Sea crisis impact on global supply chains

GLOBAL – Maersk CEO Vincent Clerc has highlighted the severe challenges faced by carriers and businesses due to the ongoing crisis in the Red Sea and the Gulf of Aden.

Speaking at an online event, Clerc emphasized the difficulties of navigating these disruptions, which have significantly impacted logistics and supply chains since December 2023.

The Red Sea situation has forced Maersk and other carriers to reroute ships around Africa via the Cape of Good Hope. This diversion has strained resources, with extended rotations requiring additional ships.

Clerc noted, “We are faced with these challenges together, and we need to make sure that we stay close to them as we handle the new set of circumstances that continues to unfold in front of us.”

The availability of extra shipping capacity was limited from the outset. Clerc explained, “All ships that can sail and all ships that were previously not well utilized in other parts of the world have been redeployed to try to plug holes.”

However, these measures have only partially mitigated the problem. The situation is compounded by strong demand for container transport, which has not waned despite the disruptions.

Another major issue has been the increased costs associated with longer cargo journeys and reduced capacity. The price per container has risen significantly, and Maersk has had to absorb these higher costs.

Clerc stated, “The longer that this lasts, the more our costs will get deeply ingrained. We don’t know yet exactly how much of these costs we will recover and for how long.”

The higher freight rates are a temporary measure, according to Clerc. He mentioned that normal rates would resume once ships could return to their usual routes through the Suez Canal.

However, the timing remains uncertain, and there will likely be congestion at ports as ships arrive simultaneously from different routes.

Maersk is committed to resuming normal sailing routes only when the safety of seafarers, vessels, and cargo is guaranteed. Clerc stressed that once a resolution is found, ships could immediately return to their usual paths. However, there will be an adjustment period as the industry rebalances its schedules.

Sea-Intelligence report insights

The Red Sea crisis has undeniably affected global shipping and schedule reliability. According to the Sea-Intelligence Global Liner Performance report, schedule reliability has improved slightly but remains below pre-crisis levels.

As of March 2024, schedule reliability has shown a slight improvement but remains below pre-crisis levels. The overall schedule reliability increased by 1.6 percentage points month-on-month to 54.6%, yet it is down by -7.9 percentage points year-on-year.

Among the top 13 carriers, Wan Hai emerged as the most reliable with a schedule reliability of 59.7% in March 2024. Hapag-Lloyd and ZIM followed closely with 56.1% each, while PIL recorded the lowest reliability at 49.0%.

Although eleven carriers showed month-on-month improvements, none saw a year-on-year increase in schedule reliability.

The average delay for late vessel arrivals decreased slightly by 0.52 days month-on-month to 5.03 days. Despite this marginal improvement, the crisis continues to impact shipping operations, contributing to increased CO2 emissions due to longer routes between Asia and Northern Europe and the Mediterranean.

For all the latest fresh produce industry news updates from Africa, the Middle East, and the World, subscribe to our NEWSLETTER, follow us on Twitter and LinkedIn, like us on Facebook, and subscribe to our YouTube channel.