Maersk CEO Vincent Clerc speaks to ‘massive impact’ of the Red Sea situation on global supply chains

Speaking at a recent online event with customers, Vincent Clerc talked about the challenges the continuing attacks on ships in the Red Sea / Gulf of Aden have created for logistics and supply chains. For the time being, Maersk ships are continuing to divert around the Africa via the Cape of Good Hope in South Africa. He acknowledged the situation is difficult for both carriers and businesses needing their cargo transported.

Clerc: "We are faced with these challenges together, and we need to make sure that we stay close to them as we handle the new set of circumstances that continues to unfold in front of us. These disruptions, and the impact they are having on your business, are not something that I, nor any colleagues at Maersk, take lightly. We know it is hard. We know it is difficult for you. We know it puts you under a lot of pressure."

Vincent Clerc talked about the 'massive impacts' of the Red Sea situation since it began in December 2023. Extending rotations to travel the longer route around Africa takes two to three ships, depending on the trade in question, he said. The availability of additional capacity was low to begin with and, across the industry, carriers' ability to bring in extra tonnage has been limited. At the same time, demand for container transport has remained strong.

Clerc: "Today, all ships that can sail and all ships that were previously not well utilised in other parts of the world have been redeployed to try to plug holes. It has alleviated part of the problem, but far from all the problem across the industry, including for Maersk. We are going to have in the coming month missing positions or ships that are sailing that are significant different size from what we normally would have on that string, which will also imply reduced ability for us to carry all the demand that there is."

Planning for demand peaks around Lunar New Year helped soften 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 increased costs. With cargo journeys lengthened and capacity squeezed, the price per container has risen significantly. Maersk has taken on these costs knowing that many of them will remain beyond the Red Sea situation.