Maersk, Hapag Lloyd consider fleet expansion amid Red Sea turmoil
Date
9/11/2024 6:05:01 AM
(MENAFN) Maersk and Hapag-Lloyd announced on Tuesday that they are contemplating an expansion of their shipping alliance if disruptions in the Red Sea persist. The two major shipping companies, which formed an alliance earlier this year, have faced challenges in navigating the Red Sea due to ongoing attacks by Yemen's Houthi movement, forcing many vessels to take longer, costlier routes around Africa. This potential shift comes in response to the persistent instability in the region, which has made the traditional shipping routes through the Red Sea increasingly risky.
Earlier this year, in January, Denmark's Maersk and Germany's Hapag-Lloyd launched a new partnership known as the Gemini Collaboration, set to begin in February 2025. This alliance was initially designed to handle the movement of 3.4 million containers annually using a fleet of 290 vessels. However, the companies revealed that the collaboration could be expanded to include up to 340 ships, thereby increasing the capacity to 3.7 million containers annually if the unrest in the Red Sea continues. By pooling their resources, Maersk and Hapag-Lloyd aim to offer more frequent and adaptable shipping services, enhancing overall operational efficiency and reliability.
Maersk has indicated that a decision regarding the potential fleet expansion will be made by October. The company is weighing whether to proceed with the original plan, which involves routing through the Red Sea and the Suez Canal, or to opt for the alternative, more extensive route around Africa that would necessitate a larger fleet. Both companies have set a high goal of achieving a timeframe compliance rate exceeding 90 percent once the partnership is fully operational. Under this agreement, Maersk is to provide 60 percent of the vessels, while Hapag-Lloyd will contribute the remaining 40 percent, underscoring their commitment to overcoming current logistical challenges and ensuring the smooth flow of global trade.
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