‘Havoc is Going to Start’ When Ocean Carriers Return to Suez Canal, Maersk Exec Says
The continuing diversions of container ships away from the Red Sea has upended global trade for the better part of 11 months, when Yemen-based Houthi rebels first began their attacks on commercial vessels entering the waterway.
And if a recent update from two ocean carrier giants is any sign, it’s still apparent the diversions around southern Africa’s Cape of Good Hope will continue well into 2025.
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On Oct. 9, the Gemini Cooperation of Maersk and Hapag-Lloyd told customers it was scrapping one of its proposed network plans which would have had vessels travel through the Suez Canal after the alliance goes into effect next February.
The other routing option in the vessel-sharing agreement, the Cape of Good Hope network, will be phased in starting Feb. 1, 2025, the official first day of operation for the alliance.
However, even if the Red Sea and Suez Canal were cleared for safe passage, shippers cannot instantly expect smooth sailing.
During the naming ceremony of the dual-fuel methanol Alexandra Maersk container ship at the U.K.’s Port of Felixstowe, Maersk chief commercial officer Karsten Kildahl said to expect a chaotic return to the Suez in the event the Houthi problem goes away.
“The moment the canal opens, the havoc is going to start, because you will have [many] vessels coming in at the same time,” said Kildahl. “Vessels that left Asia two weeks earlier will clash with vessels that leave Asia. So, if you think it was a nightmare operation when the canal closed, it’s nothing compared to what it’s going to look like when it opens again. At that point, we will have several weeks, I would even say a couple of months, when you have something that will look like an operational meltdown. And we don’t take this lightly.”
Kildahl said the schedule would remain under review, but said that the carriers “cannot just flip-flop” based on changing security reports, or the appearance that the waterway is safe.
“They need to know what their lead times are, when they’re planning when they can have their things in the store,” said Kildahl. “We want to give them as much opportunity as possible to plan their operations.”
Hapag-Lloyd and Maersk aren’t fully ruling out any possible Red Sea return, but they will make the “as soon as it is safe to do so.”
Container shipping execs have long maintained that the Red Sea operations would not be an immediate fix even if safety was guaranteed. Hapag-Lloyd said as far back as June that it would take at least four to six weeks to rearrange the schedules and for operations to return to normal.
For now, the trip around Africa will have plenty of freight capacity. Gemini’s Cape of Good Hope network includes a fleet of 342 vessels that carry a total capacity of 3.7 million 20-foot equivalent units (TEUs) covering seven East-West trade lanes. Roughly 300 ships carrying 3.4 million TEUs of capacity would have been required on the Red Sea route.
According to Xeneta, diversions around the Cape of Good Hope have caused global TEU-mile demand to increase by 17.2 percent year over year in 2024.
Upon revealing its own standalone East-West container shipping service network alongside Gemini’s plans, Mediterranean Shipping Company (MSC) also said it would offer weekly services via either the Cape of Good Hope or the Suez Canal come February. The largest container shipping firm by TEU capacity, MSC has not indicated yet whether it will also scrap the Red Sea route for the time being.
As the date to the Gemini Cooperation’s vessel-sharing deal kicks into gear, a major question remains whether they can deliver on one of container shipping’s wider problems in the wake of the Red Sea disruptions—schedule reliability.
Both Maersk and Hapag-Lloyd are targeting a schedule reliability level north of 90 percent—one of the biggest selling points of the partnership. But both carriers, and the industry at large, still have a long way to go to make that happen. Maersk was the most reliable top-13 carrier in August 2024 with schedule reliability of 54.7 percent, followed by Hapag-Lloyd with 54.3 percent, according to data from Sea-Intelligence.
In August 2024, global schedule reliability across the major carriers was 52.8 percent, down 10.2 percentage points from the year before.
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