Maersk diverts shipping away from Red Sea region for "foreseeable future"

Investing.com -- Shipping giant Maersk (CSE:MAERSKb) has said it would divert its vessels away from the Red Sea region for the "foreseeable future" in response to "significantly elevated" security risks posed by recent attacks by Yemen's Iran-backed Houthis.

In a statement on Friday, the world's second-largest shipper called the situation in the area -- a crucial trade artery between Europe and Asia -- "highly volatile." It added that its vessels due to transit through the region will instead be sent south around the Cape of Good Hope in southern Africa.

"By suspending voyages through the Red Sea [and] Gulf of Aden, we hope to bring our customers more consistency and predictability despite the associated delays that come with the re-routing," Maersk said.

However, the company warned customers to prepare for "complications" to continue in the area.

The announcement comes after Denmark's Maersk halted all ships bound for the Red Sea and nearby Gulf of Aden last week in the wake of an assault on its Singapore-flagged Hangzhou vessel.

Houthis have been targeting vessels in the Red Sea since November in a show of support for Hamas, which is currently engaged in a conflict with Israel in the Gaza Strip. Along with Maersk, several other shipping groups have moved to either suspend travel through the region or take the costlier route around the Cape of Good Hope.

Analysts at Jefferies said in a note to clients that they expect the disruptions to persist for some time, although the situation remains "fluid."

"Our base case is that ships will divert during [the first quarter of 2024] and will gradually return to normal Red Sea operations during the second half of the year," the Jefferies analysts said.