Red Sea upheaval 'could last for months' - Maersk

(Sharecast News) - AP Moller-Maersk warned on Thursday that the disruption in the Red Sea could last for months, putting both trade and the global economy at risk. In an interview with the Financial Times, Vincent Clerc, the Danish firm's chief executive, called the closure of the Red Sea to most container shipping "brutal and dramatic" with "no winners".

"It's unclear to us if we are talking about re-establishing safe passage into the Red Sea in a matter of days, weeks or months. It could potentially have quite significant consequences on global growth," he said.

The Red Sea was closed to container shipping after a series of attacks by Yemen's Houthi rebels. A Maersk container was attacked last month, and last week the firm - which carries around a fifth of ocean freight - said it would divert ships from the Red Sea "for the foreseeable future".

The Red Sea is a crucial trade passage between Asia and Europe. With the route now closed, however, ships are having to make costly detours around South Africa.

Clerc told the FT: "At this time when inflation is a big issue, it's putting inflationary pressure on our costs, on our customers and ultimately on consumers in Europe and the US.

"In the short run, it could cause significant disruptions at the end of January, February and into March."

The FT noted that Maersk's fuel bill would be 50% higher as a result of ships making lengthy detours around the Cape of Good Hope.

Clerc said: "We are urging the international community to mobilise and do what it needs to do to re-open the strait. It is one of the main arteries of the global economy, and it is clogged right now.

"It could have wider-ranging consequences, not only for the industry but for end consumers, product available, the global economy as a whole."

The UN Security Council passed a resolution on Wednesday demanding an immediate end to the Houthi attacks.