Maersk warns of ‘persistent and significant’ disruption in Red Sea

SHIPPING giant Maersk has said all shipments will be rerouted around the south of Africa for the foreseeable future as it fears “persistent and significant” disruption in the Red Sea from Houthi rebel attacks.

Maersk told companies that it would reroute all vessels due to transit through the Gulf of Aden around the Cape of Good Hope as there was no end in sight for the attacks on ships travelling to the Suez Canal. Rerouting ships adds around two weeks to journey times, increasing fuel costs and reducing global shipping capacity in a major threat to the world’s supply chains.

The Suez Canal is the conduit for 12pc of global seaborne trade and analysts have warned that if the conflict drags on, the risk of disruptions driving up inflation will increase as high freight costs push up consumer goods prices.

Goldman yesterday raised its forecast for the euro area’s core inflation in May from 2.2pc to 2.3pc, though it left its year-end forecast unchanged.

In a note to clients, analyst Christian Schnittker said forecast $3-4 increase in oil prices could add a further 0.1 percentage point to its forecasts.

Mr Schnittker wrote: “A prolonged rerouting of cargo away could push up transport prices further and have a slightly larger inflation effect.”

Data from the Shanghai Containerised Freight Index yesterday showed shipping costs between Asia and Europe have surged by 179pc since mid-December. However, the rates are still only a fraction of peaks reached during Covid.

In an announcement yesterday, Maersk said: “We encourage customers to prepare for complications in the area to persist and for there to be significant disruption to the global network. All decisions prioritise the safety of our vessels, seafarers and your cargo.”

Jack Kennedy, the head of Europe and Middle East country risk at S&P Global Market Intelligence, said: “This is something that could last for several months into the year, if not longer.”

Mark Wall, the chief economist at Deutsche Bank, told investors yesterday that the disruptions “could drive some inflation concern near term”.

The warnings present a new headache for policymakers just as the last inflationary wave is receding.

The UN’s Food and Agriculture Organisation said yesterday that global food prices dropped almost 14pc in 2023 compared to a year earlier, marking the biggest fall since 2015.

Official data also showed inflation in the eurozone picked up again, rising from 2.4pc in November to 2.9pc in December as a result of stubborn energy prices.

However, core inflation kept falling, raising economists’ hopes that the European Central Bank will be able to cut interest rates in the coming month to support the economy, which is facing a recession.