Maersk and CMA CGM impose surcharges to cover costs of Red Sea diversions

Shipping costs have risen as the threat of Houthi attacks forces companies to send their vessels on longer routes around Africa

Maersk has told its ships to sail around the Cape of Good Hope, rather than travelling on the Red Sea. Reuters

Live updates: Follow the latest news on Israel-Gaza

Maersk and CMA CGM, two of the world's largest shipping companies, will impose additional charges to cover the costs of rerouting their ships, after attacks on vessels in the Red Sea carried out by the Iran-backed Houthi rebels.

A standard 20-foot container travelling from Far East Asia to Northern Europe will have an additional total charge of $700, Danish conglomerate Maersk said late on Thursday. The cost comprises $200 as a transit disruption surcharge (TDS) and $500 as peak season surcharge (PSS).

CMA CGM also announced surcharges late on Thursday, including an extra $325 for every 20-foot container on the North Europe to Asia route and $500 for a 20-foot container shipped from Asia to the Mediterranean.

The French company's surcharges start from $150 on its Canada East Coast to Asia service and goes up at $1,550 for its route between Europe and Oceania, it said.

The additional costs will be applicable "with immediate effect and until further notice", Marseille-based CMA CGM said.

Maersk said on Tuesday that its vessels would avoid the southern Red Sea and the Gulf of Aden due to attacks in the area, sailing instead around the Cape of Good Hope.

Journeys to the Mediterranean and the east coast of North America will incur PSS surcharges of $1,000 and $500, respectively, with the TDS remaining at $200 for both routes.

The surcharges are double for 40-foot containers, the company said.

The extra costs are for shipments that are already "on the water" and that have been or will be diverted, Maersk said. The PSS is for selected markets and will be in effect from January 1 "until further notice", it added.

The Copenhagen-based company said the decision was taken after "carefully considering changes to services to ensure the safety of our seafarers, vessels and customers’ cargo", as it continues to monitor the situation in the Red Sea and Gulf of Aden.

Maersk added that it may increase the surcharges "depending on the circumstances", but hopes to withdraw them "as soon as operationally feasible".

"Diverting vessels around the Cape of Good Hope to mitigate the ongoing risks of sailing through the region is a necessary step in the interest of safety, but it has ultimately brought about increased costs for carriers," it said.

Shipping costs in the Red Sea have risen as the threat of attacks by Yemen's Houthis force companies to divert their vessels to longer routes.

The situation has also gone beyond the acceptable risk of doing business and has escalated amid concerns about the security and welfare of seafarers.

Maersk and Hapag-Lloyd suspended Red Sea operations on Friday after their vessels became the targets of Houthi missiles. They were joined by other major shipping companies, including CMA GGM and the Mediterranean Shipping Company.

The four companies collectively control about half of the global container shipping market.

Taiwan's Evergreen said on Monday that it had temporarily stopped accepting Israeli cargo, instructing its vessels to avoid passing across the Red Sea until further notice and directed them to go around the Cape of Good Hope.

British oil company BP also stopped all of its operations through the Red Sea, which it called a “precautionary pause under ongoing review” due to the “deteriorating security situation”.

"Future services would also be the subject of a security evaluation to determine necessary contingencies," Maersk said.

Analysis of more than 300 industrial categories and 6,000 products indicated that 14.8 per cent of all Europe and Mena imports were shipped from Asia and the Gulf by sea, according to S&P Global Market Intelligence.

Consumers around the world are also expected to be hit by the rising costs of Red Sea freight journeys, analysts have said.

The transport of goods with a short shelf life will be difficult on the longer alternative routes that vessels must now take and consumers will bear the brunt of the disruptions, they said.