by Ocean and Major Ports update
Maersk CEO Vincent Clerc has said that the coming months will be challenging for carriers and businesses as the situation in the Red Sea stretches into the third quarter of 2024.
Speaking at a recent online event with clients, Vincent Clerc spoke about the challenges that ongoing attacks on ships in the Red Sea / Gulf of Aden have created for logistics and supply chains. At the moment, Maersk ships are continuing to divert around Africa via the Cape of Good Hope in South Africa. He acknowledged that the situation is difficult for both carriers and businesses that need to transport their cargo.
We face these challenges together and must ensure that we stand by them as we face the new set of circumstances that continue to unfold before us. These disruptions and the impact they have on your business is not something that I, nor any of my colleagues at Maersk, take lightly. We know it’s hard. We know it’s hard for you. We know this puts a lot of pressure on you.
Impact on supply chains
Clerc spoke of the “massive implications” of the Red Sea situation since it began in December 2023. Expanding the rotations to travel the longest route around Africa requires two to three ships, depending on the trade in question, he said. The availability of additional capacity was initially low and, across the industry, the ability of carriers to bring in additional tonnage has been limited. At the same time, demand for container shipping has remained strong.
Today, all seaworthy ships and all ships that were previously underutilized in other parts of the world are redeployed in an effort to close the holes. It has alleviated some of the problem, but not all of it across the industry, including for Maersk. We will have missing positions in the next month or vessels sailing significantly different sizes than we would normally have in that range, which will also mean a reduced ability for us to meet all the demand that exists.
Planning for peak demand around the Lunar New Year helped mitigate the impacts of the Red Sea situation in the first quarter of 2024. However, since April and May, the challenges have intensified.
Another major challenge for carriers has been rising costs. With extended cargo journeys and tight capacity, the price per container has increased significantly. Maersk has assumed these costs knowing that many of them will remain beyond the Red Sea situation. For example, ships cannot be chartered for several months to fill current vacancies. Instead, carriers must sign up for several years with the card’s higher rates. Clerc said this is one of the reasons freight rates are temporarily higher.
Clerc stressed that Maersk would return to sailing through the Red Sea / Gulf of Aden only when the safety of seafarers, ships and cargo was guaranteed. He said that once a solution is found, ships can return to their usual voyages through the Suez Canal almost immediately. Others would have to complete their journey around the Cape of Good Hope first. Clerc warned that there would be a period during which ships on these different routes would arrive at ports at similar times. He expected this to cause congestion at the ports, before returning to a more stable scenario.
Air transport update
In the global air cargo market, data released by the International Air Transport Association (IATA) continues to support the improving profitability outlook for 2024. The airline industry is projected to reach a total air cargo volume of 62 million tons in 2024, a vital aspect of the global economy delivering $8.3 trillion in trade.
Operational adjustments and a shift to pre-pandemic rates point to a correction period after the exceptional levels of 2021. North America remains an important contributor to industry earnings with strong yields and strong consumer spending driving revenue growth.
At Maersk, we are committed to our air solutions amid the constant disruptions of the ocean. We have a seamless service offering that runs through Tanjung Pelepas (TPP) to our hubs in Singapore and Kuala Lumpur as an intermediate transit and cost option between Air and Ocean. Customers can benefit from our unique TPP service, where our first leg on the Ocean is a short distance via TPP. This ultimately provides a significant reduction in transit time from 23-60 days to approximately 12-16 days for our customers moving to markets outside of Asia.
For more information on this specific service or our other air freight solutions, please contact your sales representative or contact our team via this form.
Topics, trends and insights
Maersk @ Home Delivery World
Home Delivery World (HDW) is Last Mile Logistics’ premier exhibition and trade show, bringing together industry leaders and customers across North America to update parcel delivery, heavy goods and digital supply chain trends . In its 12th year, Delivery World has evolved to encompass every aspect of the retail logistics and supply chain process, from inventory management and in-warehouse fulfillment to delivery and the customer experience at destination. final. This is an incredibly important topic for our ground freight and e-commerce customers, committed to finding solutions, innovations and leading service providers to partner with as they grow and mature in all aspects of Freight Movement and Home delivery.
For both Maersk and our customers, HDW provides an excellent forum for face-to-face connections and networking opportunities with solution providers to evolve our thinking and service delivery capabilities. It also represents an opportunity for us to expand our reach and deepen the learning between us and the market, so we can find great fits for the services we offer to customers and businesses to bring maximum value. Most importantly – it broadens our thinking, giving us the opportunity to take on the latest innovations and evolve our service offerings for the future, helping you think about how your supply chain can deliver more value. for your business and customer. At this year’s conference, we were able to make new connections and strengthen current ones by listening to their day-to-day issues and hearing from audience members about the problems they are facing. The panelists provided great insights on planning, predictive analytics, doing more with technology and automation, visibility and of course – better ways to serve and deliver to the customer.
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