Maersk Says Red Sea Disruption Will Cut Capacity By 15% To 20% In Q2

By Reuters
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Maersk Says Red Sea Disruption Will Cut Capacity By 15% To 20% In Q2

The disruption to container shipping traffic in the Red Sea is increasing and is expected to reduce the industry's capacity between the Far East and Europe by some 15%-20% in the second quarter, shipping group Maersk has said.

Maersk and other shipping companies have diverted vessels around Africa's Cape of Good Hope since December to avoid attacks by Iran-aligned Houthi militants in the Red Sea, with the longer voyage times pushing freight rates higher.

Attacks Widening

'The risk zone has expanded, and attacks are reaching further offshore', Maersk said in an updated advisory to customers on Monday.

'This has forced our vessels to lengthen their journey further, resulting in additional time and costs to get your cargo to its destination for the time being', it added.

The Danish company, viewed as a barometer of world trade, last week said that shipping disruptions caused by the Red Sea attacks were expected to last at least until the end of the year.


The knock-on effects included bottlenecks and so-called vessel bunching, where several ships arrive at port at the same time, as well as equipment and capacity shortages.

'We are doing what we can to boost reliability, including sailing faster and adding capacity,' Maersk said, adding that it had so far leased more than 125,000 additional containers.

'We have added capacity, where possible, in line with our customers' needs,' the company said.

First-Quarter Earnings

Last week, Maersk reported first-quarter earnings above expectations and lifted the lower end of its full-year profit guidance range, supported by higher demand and the diverting of vessels away from the Red Sea.


The company said that demand is moving towards the 'higher end of our market growth guidance'. This led to a recovery in the first quarter compared to the previous quarter but also improved the outlook for the coming quarters, it noted.

"However, we still anticipate the high number of new vessels being delivered during this and next year to eventually offset these factors and put the ocean markets under renewed pressure," Maersk CEO Vincent Clerc said in a statement.

Additional reporting by ESM

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