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Hapag-Lloyd's newbuild containership Manila Express

Hapag-Lloyd's newbuild containership Manila Express. Photo courtesy Hapag-Lloyd

Red Sea Is Still Too Dangerous Says Hapag-Lloyd

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December 27, 2023

By Wilfried Eckl-Dorna (Bloomberg) Shipping giant Hapag-Lloyd AG said it will keep its vessels away from the Red Sea even after the launch of a US-led taskforce – Operation Prosperity Guardian – to protect the key route from militant attacks. 

The container liner said it will continue to reroute its vessels via the Cape of Good Hope, a detour of several thousand miles. It follows a spate of attacks on merchant ships — by Yemeni rebels acting in support of the Palestinians — on a route that handles about 12% of global trade. 

The incidents have struck everything from oil tankers to container vessels, pushing shipowners to avoid the route. That means delays and extra costs that could ultimately hit consumers. There’s been little sign of a let up in recent days, and a container ship known as the MSC United VIII was hit on Tuesday. 

The US-led Operation Prosperity Guardian got underway last week with the aim of containing a threat to global trade that’s been triggered by the war between Israel and Hamas. Yemen-based militants say that are acting in support of the Palestinians and initially were targeting ships with Israeli links. But US officials — and their allies in the region — are wary of causing an escalation in the conflict by too heavy-handed a response.

For some companies, the taskforce has provided reassurance. A.P. Moller-Maersk A/S, the world’s second-largest container line, said it was preparing to resume shipping through the Red Sea. Another liner, CMA CGM also said on Tuesday it was devising plans to gradually increase the number of ships it sends through the Suez Canal. Oil prices have risen since the attacks stepped up, but traders are still not pricing in major disruptions.

Some vessels have been considering transiting the Red Sea at night in order to avoid drone attacks. Advice to shipping at start of Operation Prosperity Guardian said that drones have generally been active during daylight hours, while it may also be harder for seaborne attacks to hit vessels at night. 

(adds background)

By Wilfried Eckl-Dorna and Alex Longley © 2023 Bloomberg L.P.

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