Hapag-Lloyd: Israel-Hamas Ceasefire Would Not Put End to Red Sea Crisis
In the event of a ceasefire between Israel and Hamas, Hapag-Lloyd isn’t convinced the Red Sea disruptions are going to ease up any time soon.
“Even if there were to be a ceasefire now, this does not mean that the Houthi attacks will stop immediately,” a company spokesperson told Reuters.
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In the months that ocean carriers have avoided the Red Sea and the Suez Canal, vessel capacity has been put in a bind, deliveries of goods have taken longer, major global ports have seen more congestion and freight rates have escalated back to levels unseen since late 2022.
A ceasefire deal remains in limbo, with U.S. Secretary of State Antony Blinken saying Wednesday that Israel had accepted a U.N.-backed proposal but that Hamas had proposed changes to the deal.
When news broke out of a potential easing of hostilities in the Gaza Strip, numerous container shipping firms saw stock declines Tuesday, with Hapag-Lloyd shares falling 9 percent and Maersk’s cooling off 7 percent. Israel-based Zim plummeted 14 percent. The quick price action is likely due to higher profit expectations in the wake of the mass vessel diversion, which had driven the industry’s stock prices up from April to June.
Even after the Suez Canal opens again for transit, it would take at least four to six weeks to rearrange the schedules and for operations to return to normal, Hapag-Lloyd added.
The projection is still much more bullish than that of Alan Murphy, founder of maritime trade advisory service Sea-Intelligence, who said in late April that it would “take six to 12 months before we actually have stable networks running through the Suez again” even after a long-term safe resolution to the Red Sea crisis was put in place.
Lars Barstad, the CEO of oil tanker giant Frontline Management AS, agreed with the consensus in a post on X Wednesday, saying “to expect owners to put their seafarers at risk passing the Red Sea/Gulf of Aden anytime soon is a bit naive. The passage takes time and any ceasefire will be vulnerable with risk of crew being caught if it breaks.”
Maersk shared its own updated assessment of the Red Sea situation, reiterating in a Wednesday note that it anticipates that the disruptions will continue into the second half of 2024.
The ocean freight giant says it is seeing an average 40 percent increase in fuel costs when traveling around southern Africa’s Cape of Good Hope compared to normal voyages Red Sea and neighboring Gulf of Aden.
Amid the concerns of a vessel capacity crunch, Maersk added 125,000 more containers to its fleet to increase shipping reliability. The company is exploring further capacity enhancements.
According to an assessment of the Houthi attacks released Wednesday by the U.S. Defense Intelligence Agency, container shipping in the area declined 90 percent between December and February.
“Alternate shipping routes around Africa add about 11,000 nautical miles, one to two weeks of transit time, and approximately $1 million in fuel costs for each voyage,” the report says.
The repeated onslaught of drone and missile attacks on commercial vessels in the Red Sea and Gulf of Aden has persisted since November, with the Iranian-backed militants claiming that the attacks are in protest of the Israel-Hamas war in the Gaza Strip and in support of Palestinians.
But the attacks have often indiscriminately targeted vessels that have no national alignments in that conflict, further questioning the impact of a potential ceasefire. And many with ties to the Department of Defense, including former Defense Secretary Robert Gates and former U.S. ambassador to Israel Dan Shapiro, have said the attacks are unrelated to Israel or the Hamas conflict.
The Houthi attacks took a turn for the worse on Wednesday, with a strike on a Greece-owned bulk carrier, Tutor, killing a seafarer and leaving the ship temporarily unable to maneuver in the Red Sea. The hit stemmed from an explosive-laden, remote-controlled boat, causing severe flooding and damage to the engine room, according to an update from U.S. Central Command.
This makes Tutor the second vessel to lose a member of its crew due to Houthi-engineered assaults, after three crew members were killed on bulk carrier True Confidence in March.
The vessel was 66 nautical miles (76 miles) southwest of Hodeidah, Yemen, according to the U.K. Maritime Trade Operations (UKMTO).