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Maersk (OTCPK:AMKBY) (OTCPK:AMKBF) said Friday it will divert all vessels away from the Red Sea “for the foreseeable future,” warning customers to expect “significant disruption to the global network.”
All of Maersk’s (OTCPK:AMKBY) (OTCPK:AMKBF) ships that had been due to transit the area will now sail south, around the Cape of Good Hope, adding ~10 days to trip times and jacking up costs.
Maersk (OTCPK:AMKBY) (OTCPK:AMKBF) had said earlier this week it would pause all vessels bound for the Red Sea following an attack on one of its ships by Houthi militants, but the shipper’s plan to continue to shun the Red Sea indicates it views the naval response from western countries as insufficient to secure the area.
The Suez Canal is used by roughly a third of global container ship cargo, and re-directing ships around the southern tip of Africa is expected to cost as much as $1M extra in fuel for every round trip between Asia and Northern Europe.
Shares of Maersk (OTCPK:AMKBY) (OTCPK:AMKBF) and shipping peer Hapag-Lloyd (OTCPK:HLAGF) (OTCPK:HPGLY) have surged 19% and 34% respectively in the past three weeks, as spot rates for shipping have skyrocketed.
But stock price reactions likely are overdone, according to Megha Mandavis of The Wall Street Journal Heard On The Street column, mainly because of significant new shipping capacity set to come online, which means the bottleneck – while real – should ease again before long.
Other potentially relevant companies include ZIM Integrated Shipping (ZIM), Frontline (FRO), DHT Holdings (DHT), Nordic American Tankers (NAT), Diana Shipping (DSX), Danaos, Teekay (TK) Teekay Tankers (TNK), Scorpio Tankers (STNG), Euronav (EURN), Golden Ocean (GOGL), Global Ship Lease (GSL), Matson (MATX), Navios Maritime Partners (NMM), Eagle Bulk Shipping (EGLE), International Seaways (INSW), Star Bulk Carriers (SBLK), Genco Shipping (GNK), Ardmore Shipping (ASC), Safe Bulkers (SB), Grindrod Shipping (GRIN), C.H. Robinson (CHRW), MPC Container Ships (OTCPK:MPZZF).
