Market Analysis

The disruption in container shipping traffic along the Red Sea is worsening, with the industry's capacity between the Far East and Europe expected to decrease by around 15%-20% in the second quarter, according to Maersk, a prominent shipping group. 

Last week, the company, often seen as a gauge of global trade, stated that disruptions caused by attacks from Houthi militants on vessels in the Red Sea are likely to persist until the end of the year.

Maersk informed its customers on Monday that the risk zone has expanded, leading to attacks occurring farther offshore. Consequently, their vessels are now compelled to take longer routes, resulting in increased time and expenses to deliver cargo to its destination temporarily.

The ramifications of this situation extend to bottlenecks, vessel bunching, where multiple ships converge at ports simultaneously, and shortages of equipment and capacity. To enhance reliability, Maersk is taking measures such as sailing at higher speeds and acquiring additional capacity. They have already leased over 125,000 extra containers to address the challenges.

Paraphrasing text from "Reuters" all rights reserved by the original author.