Source: Bloomberg
Major container shipping companies have switched away from the Red Sea and Suez Canal to the longer route around Africa’s Cape of Good Hope following attacks on shipping by Houthi militants.
“Be prepared for the Red Sea situation to last into the second half of the year and build longer transit times into your supply chain planning,” Maersk’s head of North America, Charles van der Steene, said in a statement on Tuesday.
Maersk, a bellwether for global trade, has added about 6% in vessel capacity to offset delays as vessels take the longer route around southern Africa, it said.
The Copenhagen-based company also told customers, which include retail giants such as Walmart and Nike, to prepare for higher supply chain costs. Longer sailing times have already boosted freight rates.
“Many customers factor a cost per unit into their budgeting, and if that fundamentally changes due to all of this volatility, it could have a big impact on overall costs,” van der Steene said.
Longer sailing times around Africa have also meant significant delays for vessels bound for the U.S. East Coast, said Maersk, advising customers to consider alternative ports in Mexico, the Pacific Northwest, and Los Angeles for goods bound for the East Coast.
Heavy congestion in Oakland, California, have also resulted in delays for container vessels returning to Asia to pick up goods, Maersk noted.
