Maersk sees no Suez Canal return until ‘well into 2025’ due to Red Sea threat

9:39 am Thursday, October 31st, 2024

By Stine Jacobsen

COPENHAGEN (Reuters) -A.P. Moller-Maersk expects strong demand for shipping goods around the world to continue in the coming months, but sees no return to sailing through the Suez Canal until 2025 due to the threat of Red Sea attacks.

Attacks on vessels in the Red Sea by Iran-aligned Houthi militants have disrupted a shipping route vital to east-west trade, with prolonged re-routing of shipments pushing freight rates higher and causing congestion in Asian and European ports.

“There are no signs of de-escalation and it is not safe for our vessels or personnel to go there … Our expectation at this point is that it will last well into 2025,” Chief Executive Vincent Clerc told journalists.

The company said it had seen strong demand in the third quarter especially driven by exports out of China and Southeast Asia and that it saw no signs of a slowdown in volumes from Europe or North America in the coming months.

“Management was bullish about the near future and highlighted good demand for container freight,” Sydbank analyst Mikkel Emil Jensen told Reuters

Some investors might also expect Maersk to resume its suspended share buyback programme even though the company said a decision had not yet been made, Jensen added.

Maersk’s shares rose 6.4% by 1253 GMT.

Clerc brushed aside concerns that the U.S. election and potential trade tariffs could upend the global freight market further.

“None of the candidates (in the U.S. election) has a view that we need to slow down economic activity … as long as the economy seems strong and consumption is strong there will be continued strong demand for container traffic,” he said.

Maersk confirmed robust preliminary third-quarter earnings released on Oct. 21, when it also raised its full-year forecasts citing solid demand and the continuing disruption to shipping in the Red Sea.

(Reporting by Stine Jacobsen and Isabelle Yr Carlsson; Editing by Terje Solsvik and Jane Merriman)