Global economic growth could be significantly impacted by the sustained interruption of trade flows through the Red Sea, according to Vincent Clerc, CEO of container shipping firm Maersk. The timeline for re-establishing passage through the waterway remains uncertain, with potential repercussions for global growth, warned Clerc.
Maersk announced that its vessels would be rerouted from the Red Sea, a key access point to Egypt's Suez Canal, the fastest route between Europe and Asia, for an indefinite period. Instead, vessels are circumnavigating the southern coast of Africa, adding between two to four weeks to a Europe-Asia journey. Additionally, Maersk reported delays in some inland transportations due to strikes in Germany.
The rerouting decisions by Maersk and other companies are in response to a series of attacks on ships by Houthi militants from Yemen. Despite the launch of a U.S.-led military taskforce, conflicts persist into the new year, with the Houthis launching their largest attack yet this week.
Tesco's managing director, Ken Murphy, has indicated that product prices may rise due to the ongoing disruption in the Red Sea. This statement was made as the company reported potential profits larger than initially projected.
Murphy warned that this detour could indirectly affect the prices of certain goods. He explained: 'If they do have to go the whole way around Africa to get to Europe, it extends shipping times, it constrains shipping space and it drives up shipping costs.'