Attacks on cargo vessels in the Red Sea by Yemen-based Houthi rebels are unlikely to end soon, forcing shipping companies to avoid the route through the Suez Canal, the head of Germany’s Hapag-Lloyd told reporters on Wednesday.
“We don’t think it will be over the day after tomorrow,” chief executive Rolf Habben Jansen said at a news briefing in Hamburg. “Whether it’ll be one, three or five months – I don’t know.”
A political deal and a mission to protect freight vessels might bring a resolution within six months, he added.
Hapag-Lloyd, the world’s fifth biggest container liner, has joined other shippers in taking longer, costlier journeys around Africa, after one of its ships was attacked on Dec. 15.
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It was important that the European Union actively supported a multinational naval coalition to protect commercial traffic in the region, Habben Jansen said.
Rerouting around Africa takes vessels 2-3 weeks longer, resulting in a drop of 150,000 standard containers (TEU) being transported in December compared with original expectation, he said.
Hapag-Lloyd transports roughly one million TEU per month on its 264-strong fleet.
Mitigations have included buying more containers, adding 125,000 in TEU capacity at a cost of $350 million, it said. But using more ships to meet demand on time, and running those faster on more fuel, involved higher costs for customers.
On Tuesday, Hapag-Lloyd reported earnings before interest and tax for 2023 of 2.5 billion euros ($2.70 billion), a fraction of 2022’s 17.5 billion euros.
It cited lower freight rates as global supply chains normalised following the pandemic.
Source: Reuters (Reporting by Elke Ahlswede, Writing by Vera Eckert, Editing by Matthias Williams and Mark Potter)