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“We’ve not seen the level of threat peak, to the contrary,” warned Maersk CEO in a televised interview with Bloomberg TV last Thursday centered around maritime security in the Red Sea. Maersk CEO Vincent Clerc continued, “the amount or the range of weapons that are being used for these attacks is expanding and there is no clear line of sight to when and how the international community will be able to mobilize itself and guarantee safe passage for us.”
Traders call on more countries to join Red Sea security efforts: Trade associations from across the globe have signed an open letter (pdf) urging more governments to assume a more proactive role in efforts to safeguard international commercial shipping in the Red Sea, CNBC reported on Thursday. The open letter, representing major trade groups from the US, Canada, Bangladesh, Brazil, Portugal, Africa, India, Taiwan, and Poland, calls on states to “join, support, or align,” maritime security efforts in the region, including US-led Operation Prosperity Guardian. “It is imperative that countries that have not yet joined or aligned with this vital mission do so immediately,” the letter said, adding that Red Sea disruptions represent a “global problem,” that threatens global trade.
But the US-led naval task force is taking flak on the home front: Congressmen recently grilled US President Joe Biden for his unilateral decision to dispatch a naval force that primarily protects foreign-flagged vessels, CNBC wrote. France has also ceded to internal political pressure and has prioritized the protection of French-flagged vessels. Nevertheless, US trade is highly reliant on non-US-flagged vessels, with 97% of the country’s exports and imports carried by foreign-flagged vessels, particularly those from Liberia, Panama, and Hong Kong, CNBC wrote citing MDS Transmodal data.
Red Sea disruptions have seen a sharp uptick in Suezmax tankers moving westward from the Persian Gulf to ballast in Atlantic, leading to a glut in tonnage in the West African landing zone and seeing a sharp decline for freight rates for tankers loading in West Africa, S&P Global reported last week, citing sources with knowledge of the matter. February 6 saw rates for the 130k metric tons (mt) shipments from West Africa to the UK and Continental Europe stand at USD 16.98 per mt, down from January’s two-month record of USD 23.61 per mt, S&P Global said citing Platts data. The downward trend was further compounded by falling demands on the route and the US Gulf Market. “The market’s taken an absolute battering,” S&P Global said, citing a London shipbroker. Meanwhile, rates for tankers operating the 140k mt Persian Gulf to Mediterranean route are near a four-year record, standing at USD 22.93 per mt on 6 February, S&P Global also said.
Egypt can absorb part of the impact to Suez Canal’s revenue,Egypt’s Finance Minister Mohamed Maait told Reuters on the sidelines of the World Governments Summit in Dubai yesterday. Growth in other fields will recap some of the losses in Suez Canal revenues due to the disruptions, and Egypt will look to the private sector to fund projects, the newswire cited Maait as saying.
Kuwait-Oman Duqm refinery, dubbed OQ8 and inaugurated last Thursday, has ramped up to its 230k barrel a day full capacity, and looks to boost storage infrastructure to bank on its strategic location away from the Red Sea chokepoint, Bloomberg reported last week. The facility currently runs on Omani and Kuwaiti crude and produces diesel and jet fuel for export. Its location on the Arabian Sea provides it with easy access to the Indian Ocean and along alternative routes that look to bypass the Red Sea. The refinery’s operators intend to ramp up storage to accommodate tens of mns of barrels in a bid to leverage its location, Bloomberg said. “There’s a lot of strategic potential,” CEO David Bird told the outlet in an interview.
OTHER DISRUPTION NEWS WORTH KNOWING-
- Drewry’s composite World container index (WCI) was up 90% y-o-y on Thursday, despite falling 1% w-o-w to USD 3786 per 40 foot container, according to an update to supply chain advisory’s Drewry ’s WCI on Saturday.WCI was also 167% above the pre-pandemic 2019 average of USD 1420 per 40 foot container and 30.9% higher than the USD 2686 10-year average, which factors in a spike in rates seen during the pandemic period, the update said.
- Maersk has added a new service via the Cape of Good Hope, dubbed ME8, to strengthen supply chains between the Middle East and Europe, with the weekly service slated to kick off on Wednesday. The route will connect GCC ports, including Doha, Dammam, and Jebel Ali, with Mediterranean ports including Port Said, Barcelona, and Algeciras, boosting cargo capacity between the GCC and the Mediterranean, and strengthening connections within the Mediterranean basin. (Statement)
- Some 60% of ships that normally transit the Suez Canal have diverted around the southern tip of Africa. (Al Arabiya)
- Russia says it thwarted an attack on “civilian transport ships” in the Black Sea by Ukraine. Russian forces destroyed one submersible drone with artillery and disabled others through electronic warfare, with no damages to Russian vessels, the newswire said citing the Russian statement. The Black Sea represents a key trade route for Russian and Ukrainian grain and energy exports but shipments have come under increasing pressure after Russia unilaterally withdrew from a UN-brokered safe trade agreement in July. (Reuters)
