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Navigating challenges in the Red Sea and Beyond : Maersk

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COPENHAGEN : The global logistics industry is currently navigating through unprecedented challenges due to the ongoing situation in the Red Sea. The ripple effects are being felt on supply chains globally, including equipment and capacity shortages, delays, and additional costs.

At Maersk, we are committed to keeping you informed of these developments and the actions we are taking to mitigate the impact on your supply chain

The current situation and look ahead

To safeguard our crew, vessels, and our customers’ cargo, we have continued to sail around the Cape of Good Hope, adding approximately 4,000 miles to the total voyage length, resulting in longer voyage times and higher operational expenses. Currently, we are experiencing an average 40% increase in fuel costs compared to when we sail through the Red Sea / Gulf of Aden.

With roughly 30% of global container traffic typically passing through the Suez Canal, changing to longer routes has severely disrupted global trade. For example, with vessels tied up on longer journeys, we estimate there has been a 15-20% reduction in available industry-wide capacity in Q2 of 2024.

The situation is also causing delays and congestion in key ports, including Singapore, Ningbo and Shanghai. Operational bottlenecks, vessel bunching, as well as equipment and capacity shortages are all leading to delays.

We anticipate that the disruptions will continue into the second half of 2024.

Impact on Our Customers

The Red Sea situation has led to major challenges across the industry with reduced capacity, longer shipping times, and higher operational costs. Delays and longer transit times are affecting supply chains, inventory management, and production schedules globally.

We have implemented temporary surcharges to help cover these increased operational costs. We are continuously monitoring and adjusting surcharges as needed to ensure they are fair and reflective of additional costs.

How Maersk is responding to mitigate the situation

Maersk is working to improve resilience and minimise disruptions to our customers through key investments as well as through ongoing operational adjustments. To increase shipping reliability, Maersk has added 125,000 additional containers to our fleet and are exploring further capacity enhancements.

We have also increased sailing speeds, where possible, to reduce the impact of disruptions. Although this increases fuel costs, it helps to reduce the impact of delays on customers’ supply chains.

Maersk continues to minimise logistics disruptions

Maersk is closely monitoring the Red Sea situation and making dynamic improvements to our network. These improvements increase efficiency and reduce logistics costs where possible. Logistics costs have been higher than normal throughout this period, but the investments Maersk has made in the region help customers maintain inventory flow and minimise delays. This alleviates customer risk and mitigates the negative impact of supply chain disruptions.

Alternative solutions to keep supply chain resilience

In addition to the multiple investments in our Ocean services, we continue to provide alternative options to help customers minimise cargo delays and maintain flexibility.

Maersk Air door-to-door services provide fast and reliable services for urgent logistics needs to customers across a variety of industries and cargo types, featuring a comprehensive network with reach into more than 90 countries.

Maersk Sea-Air solution combines the cost-effectiveness of sea freight with the speed of air freight, reducing transit time without drastically increasing costs. Maersk Sea-Air via Jebel Ali allows customers to ship from a network of ports across Asia Pacific to Jebel Ali, United Arab Emirates, with a transfer to air transportation to a wide range of final destinations across Europe.

Maersk Sea-Air via Tanjung Pelepas enables customers to transport goods from Asia Pacific ports to Tanjung Pelepas via sea freight, and then transfer to all major airports globally through Singapore or Kuala Lumpur airports

Maersk Cross-Border transportation has also implemented new routes from Xi’an and Yiwu, China, to Turkey, Georgia and Azerbaijan to help customers avoid disruptions. This route runs via block train and provides further connections into Europe using Maersk’s Ocean services. This weekly service is operating now and represents a reliable and eco-friendly solution with cargo space guarantees

We urge our customers to stay informed through our regular updates and dedicated surcharges page on Maersk.com. We understand the importance of reliability and predictability for our customers. We will continue to monitor the situation closely and keep you updated on any developments as they occur.

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