Maersk CEO Vincent Clerc said on Wednesday the disruption to global shipping caused by the attacks on vessels in the Red Sea will probably last at least a few months.
Maersk and other large shipping lines have instructed hundreds of commercial vessels to stay clear of the Red Sea, sending vessels on the longer route around Africa in response to attacks on shipping by Iranian-backed Houthi militants.
“So for us this will mean longer transit times and probably disruptions of the supply chain for a few months at least, hopefully shorter, but it could also be longer because it’s so unpredictable how this situation is actually developing,” said Clerc, speaking to the Reuters Global Markets Forum in Davos.
Freight rates have more than doubled since early December, according to maritime consultancy Drewry’s world container index, while insurance sources say war risk insurance premiums for shipments through the Red Sea are also rising.
Banking executives have said they were worried the crisis might create inflationary pressures that could ultimately delay or reverse interest rate cuts.
“This is extremely disruptive because you have close to 20 per cent of global trade that transits through the Bab al-Mandab Strait. It’s one of the most important arteries of global trade and global supply chains and it’s clogged up right now,” said Clerc.
A Malta-flagged, Greek-owned bulk carrier was struck by a missile while northbound in the Red Sea on Tuesday.
A U.S.-led coalition was established last month to safeguard commercial traffic in the Red Sea.
The U.S. and Britain last week began air strikes against Houthi military targets in Yemen in retaliation for attacks on shipping by the Houthis. The U.S. military carried out further strikes this week.
The Houthis say they are acting in solidarity with Palestinians and have threatened to expand attacks to include U.S. ships.