In 2024, a ship crosses the Suez Canal and heads towards the Red Sea. (Syed Hasan/Getty Images)
key takeaways:
- Maersk and Hapag-Lloyd said they were redirecting southern Mediterranean-China service via the Red Sea and Suez Canal.
- The move signaled confidence in the safety of the Red Sea, with hopes that sending less stocks on shorter routes could ease capacity constraints and lower shipping rates.
- Gemini Cooperation said the decision is a step towards a gradual return to the Trans-Suez network following Houthi ship attacks that began in late 2023.
A.P. Moller-Maersk A/S and Hapag-Lloyd AG signaled confidence about resuming routes through the Red Sea, sending container carriers’ stocks down in hopes a return to the shorter route will ease capacity shortages and reduce increases in shipping rates.
In statements July 6, both said they were redirecting a service that would link the southern Mediterranean to China via the Red Sea and the Suez Canal — but would rather make the longer trip around Africa’s Cape of Good Hope. Maersk and Hapag-Lloyd operate a capacity-sharing alliance known as Gemini.
Maersk and Hapag-Lloyd are ranked 7th and 17th respectively in Transport Topics Top 50 list of the largest global freight companies.
According to Maersk, the joint decision “comes after a thorough assessment of the security situation in the Red Sea region.” statement. “With this decision, the Gemini Cooperation takes a step towards a gradual return to the Trans-Suez network.”
Copenhagen-based Maersk fell as much as 9%, its biggest decline since May 7, while Hapag-Lloyd, based in Hamburg, Germany, fell as much as 4.6%, its biggest decline since April 2.
Under the plans, the first ship to change course on the Asia-Europe service will be the Majestic Maersk, which is currently owned by Oman, ship-tracking data compiled by Bloomberg shows.
Container ships and other cargo vessels have largely avoided the Red Sea since late 2023, when the Yemen-based Houthis began attacking ships in solidarity with Palestinians during the conflict with Israel.
Some carriers were planning to return to normal routes earlier this year, but the Iran war that began in late February revived threats to the maritime industry.
Taking the longer route around southern Africa to avoid conflict in the Middle East increases time and fuel costs and increases capacity. Additionally, spot container rates have increased in recent weeks due to strong demand in the peak season for ocean freight.
