Yang Ming refrains from chartering additional vessels amid the Red Sea crisis

A container ship of Yang Ming (Photo: Phaata / Shipspotting)

Speaking at a seminar organized by the Chung-Hwa Institute for Economic Research on January 24, Yang Ming's Chairman Cheng Cheng-mount stated: "There is still a tonnage overhang, but the Red Sea crisis that has caused many ships to detour round the Cape of Good Hope has resulted in freight rates jumping in the short term. Economic data is mixed and the market is actually volatile."

It is estimated that 90% of vessels previously transiting the Suez Canal are currently rerouting around the Cape of Good Hope to avoid attacks from Houthi rebels. These detours have extended transit times on the Asia-Europe route by an additional 15 days, leading to increased absorption of excess vessel capacity.

While MSC, Maersk Line, and several other container shipping companies have chartered additional vessels as available vessel capacity tightens, Yang Ming is exercising restraint in doing so.

Cheng noted, "Freight rates aren’t things that the industry can determine. Many ships are expected to have to queue up to enter European ports after passing through the Cape of Good Hope. I'm afraid there will be another round of port congestion that we saw during Covid-19."

"The container shipping sector is actually oversupplied as the Covid-19-induced pressure on the global supply chain has continued to ease. The fluctuations caused by the Red Sea crisis may inhibit economic growth. If the (Red Sea) crisis gradually subsides and demand is obviously weak, the situation will eventually normalise."

Cheng reminded attendees that the World Bank estimated that the global economy would enter its third recession year in 2024. Several international events and geopolitical conflicts have occurred consecutively, causing the economic growth rate to face recession.

Cheng pointed out, "The outlook for global economic growth in 2024 is the lowest since 2022, making this year full of uncertainties."

Read more:

• International shipping and logistics market update - Week 04/2024
• Over 200,000 Containers Bound for Piraeus Port Delayed Due to Red Sea Crisis
• Red Sea Crisis: Second Largest Capacity Drop Since the Ever Given Grounding
• Red Sea-Suez Crisis: Shipping Rates from Asia to Northern Europe and Mediterranean Quadruple

Source: Phaata.com (According to Container News) 

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