The Hamburg flag flies in front of Hapag-Lloyd containers on the Hapag-Lloyd containership “Berlin Express” at Burchardkai within the Port of Hamburg.
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MSC, the world’s largest shipping carrier, said it isn’t any longer traveling through the Suez Canal after its container ship, the MSC PALATIUM III, was attacked Friday while transiting the Red Sea under a subcharter to Messina Line.Â
“As a consequence of this incident and to guard the lives and safety of our seafarers, until the Red Sea passage is protected, MSC ships won’t transit the Suez Canal Eastbound and Westbound. Already now, some services can be rerouted to go via the Cape of Good Hope as a substitute.”
MSC explained the brand new routing will impact the sailing schedules by several days for vessels booked for Suez transit. “We ask on your understanding under these serious circumstances,” the advisory continued.
This announcement follows the announcement within the pause of Red Sea and Bab al-Mandeb Straight travel by shipping giants, Hapag-Lloyd and Maersk, following a series of attacks on their vessels by Iranian-backed Houthi militants from Yemen.
Maersk, the world’s second-largest container shipping company, moves 14.8% of the world’s trade. It said it could divert ships away from the Red Sea. The Houthi group backs Hamas, the Palestinian militant group, and has said it’s targeting vessels headed for Israel.
In an email to CNBC, a Maersk spokesman said the Danish company is deeply concerned concerning the highly escalated security situation within the southern Red Sea and Gulf of Aden. The recent attacks on industrial vessels in the world are alarming and pose a big threat to the security and security of seafarers, the spokesman added, saying that employees’ safety is the corporate’s top priority.Â
“Following the near-miss incident involving Maersk Gibraltar yesterday and yet one more attack on a container vessel today, we have now instructed all Maersk vessels in the world sure to go through the Bab al-Mandab Strait to pause their journey until further notice,” the representative said.
Maersk said it could release more details about potential next steps in the approaching days.
Hapag-Lloyd, which controls about 7% of the worldwide container ship fleet, told CNBC in an email, that it can “pause all container ship traffic through the Red Sea until Monday. Then we’ll determine for the period thereafter.”
The Bab el-Mandeb Strait is between the Horn of Africa and the Middle East. It connects the Red Sea to the Gulf of Aden and the Arabian Sea, which feed into the Indian Ocean. This waterway is utilized by container ships and exports of petroleum and natural gas from the Persian Gulf.
Roughly 12% of the world’s trade, which incorporates 30% of all global containers, move through the Suez Canal. That then feeds through the Red Sea and Bab el-Mandeb. The importance of the Suez Canal was thrust into the highlight in March 2021, when the container ship Ever Given was stuck for six days.
A ship of the Lower Saxony water police sails along in front of the container ship “Morten Maersk” of the Danish shipping company Maersk Line, which is moored at a quay wall on the container terminal JadeWeserPort.
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The collective vessel market share of MSC, Hapag Lloyd, and Maersk is roughly 40% of world trade. The decrease in vessel transits by these three ocean carriers can be a financial hit to Egypt, which owns, operates, and maintains the Suez Canal. The Suez Canal Authority (SCA) announced a record $9.4 billion was generated within the 2022-2023 fiscal yr. Increasing Suez Canal transit fees and tourism revenue play an important role, in Egypt’s struggling economy. Egypt has already seen successful in tourism attributable to the Israel/ Hamas War.
The SCA announced in October it could increase transit fees in mid-January by 5%-15%. The Suez Canal was seeing additional vessels transiting the waterway as vessels were diverting away from the Panama Canal attributable to drought restrictions.
Israel-based ocean carrier ZIM has re-routed vessels to avoid the Arabian and Red Seas to safeguard their vessels and crew amid the threats by the Houthis. The vessels are traveling across the Cape of Good Hope in South Africa. This alternative path to the Indian Ocean adds 10 to 14 days of travel time to a vessel’s journey. The good distance around Africa also incurs higher fuel costs due to longer travel distance.Â
Since Houthi militants threatened Saturday to attack any vessels which have ownership ties to Israel or do business within the country, there have been as many as seven incidents. Overall, 13 vessels have been attacked because the Israel-Hamas war began in early October.
In response to Friday’s attacks, during which three vessels were attacked, the World Shipping Council said it’s deeply alarmed and anxious concerning the escalating crisis, and that it’s calling for decisive motion to guard seafarers.
“The best of freedom of navigation stands as a fundamental right under international law, and have to be safeguarded,” the council said. “The time for resolute international engagement is now.”
The U.S. government has been in discussions with countries of the 39-member Combined Maritime Forces to form a maritime task force to “ensure protected passage” of ships within the Red Sea.
U.S. Central Command, which oversees America’s military interests within the Middle East, has told CNBC discussions are ongoing.
