Maersk and CMA CGN have implemented new fees for shipping goods on several of the world's most active shipping routes. This decision follows the re-routing of their vessels away from the Red Sea due to recent attacks. Maersk announced on Thursday that it will be introducing a Transit Disruption Surcharge (TDS) on 27 trade routes and an Emergency Contingency Surcharge (ECS) on those same routes beginning next year. The company cited "risks, delays and difficulties" in navigating through the Red Sea as the reason for the new charges.
The company stated that the cost of transporting a standard 20-foot container from North America to the Middle East will increase by a total of $1,000 on January 1. This is due to a TDS of $200 and an ECS of $800.
In addition, CMA CGM from France announced on Thursday that it will be implementing surcharges on 11 trade routes as a result of re-routing several vessels around the southern tip of Africa for safety reasons.
The firm added an extra $325 to the shipping cost for a 20-foot container traveling from northern Europe to Asia. By 11:44 a.m. ET, shares in Maersk had increased by 2.8%. It is worth noting that CMA CGM is a private company.
The Maersk Sentosa container ship sails southbound to exit the Suez Canal in Suez, Egypt, on December 21, 2023.
Stringer/Bloomberg/Getty Images
They, along with Hapag-Lloyd and MSC, are part of a group of shipping companies that are currently choosing to avoid the Suez Canal. This narrow waterway connects the Red Sea to the Mediterranean and typically facilitates as much as 30% of container trade. The decision to avoid the canal is motivated by concerns for the safety and security of crews and vessels.
The frequency of aerial attacks by the Iran-backed Houthis, who have expressed support for Hamas and the Palestinian people, has escalated since the beginning of the Israel-Hamas conflict. Most recently, Houthi rebels took credit for the recent attacks on two MSC vessels near the Bab al-Mandab Strait, which is the Red Sea outlet between the Horn of Africa and the Arabian Peninsula.
The current situation has led shipping companies to reroute their ships through the Cape of Good Hope in Africa, causing extended transit times and higher costs. As a result of ongoing attacks on ships in the Red Sea, Ikea has issued a warning about potential delays and limited availability of certain products. The company clarified that it does not own any of the container vessels used for transportation of its goods.
Oil flows are experiencing disruptions, leading to a 3.3% increase in the price of a barrel of Brent, the global oil benchmark, which now trades at $79. BP (BP) has announced a temporary halt in shipping through the Red Sea, further exacerbating supply chain issues. The significance of major shipping lanes was underscored by a six-day blockage in the Suez Canal in 2021 when the Ever Given container ship became grounded, causing delays in shipments of consumer goods from Asia to Europe and North America. This further worsened the global supply chain crisis.
