The effects of the Red Sea crisis will be prolonged
On October 9th, Maersk and Hapag-Lloyd, the "Gemini" alliance, officially confirmed that due to considerations regarding the risks in the Red Sea, they have jointly decided to activate the "Cape of Good Hope" service network from February 2025, and will consider returning to the Red Sea when safety is restored in the region.
Maersk stated, "After careful consideration and in light of the ongoing security issues in the Red Sea, Hapag-Lloyd and Maersk confirm that the 'Gemini' cooperation is expected to implement the 'Cape of Good Hope' service network in a phased manner, starting from February 1, 2025."
Earlier this year, Maersk and Hapag-Lloyd announced their partnership to create a new CP, committed to ensuring port coverage and an industry-leading 90% schedule reliability through a hub & spoke network. The "Gemini" Cape service network boasts 29 mainlines, 29 feeder services, approximately 340 vessels, and a total capacity of 3.7 million TEU.
The Chief Operating Officer of Maersk explained that the decision to announce the Cape of Good Hope service network about four months before the official launch of the "Gemini" cooperation was made to "allow customers to plan their operations."
He said, "Customers need to know their delivery times, when to ship, and when they can put things on the shelves... We want to give them as much opportunity as possible to plan their operations."
In short, as Elisabeth Braw, a senior fellow at the Atlantic Council think tank, said at the International Union of Marine Insurance (IUMI) conference, it has been proven that Western countries have almost no tools to end the crisis in the Red Sea. She warned that an era full of uncertainty, protectionism, and global disputes is coming...
In the view of the shipping industry network, Maersk and Hapag-Lloyd's decision to use the Cape of Good Hope service network sends a "clear and stable" expectation to the market, and all supply chain stakeholders no longer need to guess... The structural impact of the Red Sea crisis on the container shipping market's capacity will continue for a long time, at least for most of 2025.
In other words, simply comparing the two versions of the "Gemini" cooperation, the Cape network increases by 40 vessels and 300,000 TEU compared to the 300 vessels and 3.4 million TEU required through the Suez Canal, which intuitively reveals that the Cape network consumes an additional 9% of capacity.
The clear and stable industry consensus that the "Red Sea crisis will have a long-term impact" will be more conducive to supply chain stakeholders preparing for next year's annual contract negotiations. As shipping alliances will，（IUMI） redeploy around the "Cape of Good Hope" service network, this means that for most of 2024 and 2025, the supply and demand balance in the container shipping market will be better than in 2023, and it will continue into 2025.
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In short, over the past five years, the container shipping market has experienced at least three black swan events: the COVID-19 pandemic, the Russia-Ukraine conflict, and the Red Sea crisis. Overall, the world is entering an era of "great contention," with a complex and changing international geopolitical environment, and different crises are becoming the new normal, especially against the backdrop of alliance restructuring, there is a structural shortage of capacity, which means that the pricing mechanism of the container shipping industry will undergo significant changes, shifting from cost-plus to a price that the market can bear based on supply and demand balance.
Overall, the market has shown that shipping and logistics, as an indispensable part of current human life, or a "hard need" industry, whether for the "buyers" or "sellers" of logistics services, "complaints" and "games" are inevitable but cannot solve problems. Both supply and demand parties need to transform their relationship from "transaction" to "collaboration," face objective realities, actively respond, and react quickly to find reasonable and appropriate solutions to continuously enhance the resilience and reliability of the supply chain.
