Maersk North America Market Update - June 2024
Ocean and Key Ports Update
Maersk CEO Vincent Clerc has said that the coming months will be challenging for carriers and businesses alike, as the Red Sea situation stretches into the third quarter of 2024.
Speaking at a recent online event with customers, Vincent Clerc talked about the challenges the continuing attacks on ships in the Red Sea / Gulf of Aden have created for logistics and supply chains. For the time being, Maersk ships are continuing to divert around the Africa via the Cape of Good Hope in South Africa. He acknowledged the situation is difficult for both carriers and businesses needing their cargo transported.
We are faced with these challenges together and we need to make sure that we stay close to them as we handle the new set of circumstances that continues to unfold in front of us. These disruptions, and the impact they are having on your business, is not something that I, nor any colleagues at Maersk, take lightly. We know it is hard. We know it is difficult for you. We know it puts you under a lot of pressure.
The impact on supply chains
Clerc talked about the ‘massive impacts’ of the Red Sea situation since it began in December 2023. Extending rotations to travel the longer route around Africa takes two to three ships, depending on the trade in question, he said. The availability of additional capacity was low to begin with and, across the industry, carriers’ ability to bring in extra tonnage has been limited. At the same time, demand for container transport has remained strong.
Today, all ships that can sail and all ships that were previously not well utilised in other parts of the world have been redeployed to try to plug holes. It has alleviated part of the problem, but far from all the problem across the industry, including for Maersk. We are going to have in the coming month missing positions or ships that are sailing that are significant different size from what we normally would have on that string, which will also imply reduced ability for us to carry all the demand that there is.
Planning for demand peaks around Lunar New Year helped soften the impacts of the Red Sea situation in the first quarter of 2024. However, since April and May the challenges have intensified.
Another major challenge for carriers has been increased costs. With cargo journeys lengthened and capacity squeezed, the price per container has risen significantly. Maersk has taken on these costs knowing that many of them will remain beyond the Red Sea situation. For example, ships cannot be chartered for a few months to fill the current gaps. Instead, carriers are having to sign up to several years at the higher charter rates. Clerc said that this is one of the reasons freight rates are temporarily higher.
Clerc stressed that Maersk would only return to sailing via the Red Sea / Gulf of Aden when the safety of seafarers, vessels, and cargo was guaranteed. He said that once a resolution is found, ships could return to sailing their usual routes through the Suez Canal almost immediately. Others would need to complete their journey around the Cape of Good Hope first. Clerc warned that there would be a period during which the ships on these different routes would be arriving at ports at similar times. He expected this to cause congestion at ports, before returning to a more stable scenario.
Air Freight Update
In the global air cargo market, data released by the International Air Transport Association (IATA) continues to support profitability outlook improvement for 2024. The airline industry is projected to reach a total air cargo volume of 62 million tonnes in 2024, a vital aspect of the global economy delivering $8.3 trillion in trade.
Operational adjustments and a shift to pre-pandemic norms indicate a corrective period following the exceptional highs of 2021. North America remains a significant contributor to industry profits with robust yields and strong consumer spending driving revenue growth.
At Maersk, we are committed to our Air solutions amid ongoing ocean disruptions. We have a seamless service offering running via our Tanjung Pelepas (TPP) to our Singapore and Kuala Lumpur hubs as an intermediate transit and cost option between Air and Ocean. Customers can take advantage of our unique TPP service, with our first leg on Ocean being short haul via TPP. This ultimately provides a significant reduction of transit time from 23-60 days to approximately 12-16 days for our customers moving into different markets from Asia.
For more information on this specific service or our other air freight solutions please contact your sales rep or contact our team via this form.
Topics, Trends, and Insights
Maersk @ Home Delivery World
Home Delivery World (HDW) is a premier Last Mile Logistics exhibition and trade show, bringing together industry leaders and customers across North America to update on Parcel Delivery, Heavy Goods, Digital Supply Chain trends. In its 12th year running, Home Delivery World has evolved to encompass every aspect of the retail logistics and supply chain process, starting from inventory management and fulfillment in the warehouse to delivery and the customer experience at the final destination. This is an incredibly relevant topic for our Ground Freight and Ecommerce customers, committed to finding solutions, innovations, and top service providers to partner with as they grow and mature in all aspects of Freight Movement and Home Delivery.
For both Maersk and our customers, HDW provides a great forum for in-person connections and network opportunities with solution providers to evolve our thinking and service delivery capabilities. It also represents an opportunity for us to expand our reach and deepen the learning between us and the market, so we may find great fits for the services we offer to the customers and businesses to drive maximum value. Most importantly – it stretches our thinking, giving us the chance to take in the latest innovations and evolve our service delivery offerings for the future, helping you think about how your supply chain can drive more value for your business and customer. At this year’s conference, we were able to forge new connections and strengthen current ones by listening to their day-to- day issues and hearing from audience members on the problems they are grappling with. The panelists provided great insight on planning, predictive analytics, doing more with technology and automation, visibility and of course – better ways to serve and deliver to the customer.
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