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Red Sea Crisis Sends Maersk Shares Crashing As Outlook Darkens

“War underwriters have raised the premiums they charge to U.S., British and Israeli firms by as high as 50% for ships transiting the Red Sea and some providers are avoiding such business due to targeting of the vessels by Yemen’s Houthis, sources said. Attacks by the Iran-aligned Houthis since November have slowed trade between Asia and Europe and alarmed major powers. The Houthis say they are acting in solidarity with Palestinians as Israel’s war against Hamas militants in Gaza grinds on. Many companies have opted to re-route ships around southern Africa although some vessels are still sailing via the Red Sea.” (Source Reuters

The effects of Yemen’s direct action in support of the besieged people of Gaza has rocked the global economy at a time when outlooks are already fragile for 2024.

The US and its allies will eventually have to justify their own role in further inflaming the situation in the Red Sea and the region as a whole – by backing Israel’s genocide of Palestinians ion Gaza. What will be their next move? 


Zero Hedge reports…

Shares of A.P. Moller-Maersk A/S in Copenhagen plunged on Thursday. This decline occurred after the world’s second-largest shipping company announced fourth-quarter earnings and guidance that fell short of analysts’ forecasts, alongside the cancellation of its stock repurchase program.

Vincent Clerc, chief executive of Maersk, wrote in a statement, “While the Red Sea crisis has caused immediate capacity constraints and a temporary increase in rates, eventually, the oversupply in shipping capacity will lead to price pressure and impact our results.”

Maersk said, “Given the heightened uncertainty, the Board of Directors has decided to immediately suspend the share buy-back programme, with a re-initiation to be reviewed once market conditions in Ocean have settled.”

Shares in Copenhagen-listed Maersk sank as much as 17% in trading on Thursday. For the week, the shares are on track to record the largest decline since the first week of November.

(…) “The outlook for 2024 appears even more challenging than 2023 in the Ocean division, as oversupply of vessels peaks and Maersk’s contract exposure provides them limited benefit from spot rate increases following Red Sea diversions,” Barclays analysts wrote in a note to clients this morning.

Maersk, like many other major shipping companies, has diverted containership sailings from the Red Sea to the Cape of Good Hope following two months of Iran-backed Houthi rebel attacks on commercial vessels. This has pressured shippers by raising container, fuel, and insurance costs, among many other costs, as well as adding 1-2 weeks to the journey.

On Monday, the OECD issued a warning in a report, stating that diverting around the Red Sea is expected to increase inflation. This comes at a moment when central banks worldwide are fighting the inflation monster…

Continue this report at Zero Hedge

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