Red Sea conflict &#34;stirring the butterfly's wings&#34; may cause economic and inflationary impact on the global economy, companies, and consumers.
On Thursday, Vincent Clerc, CEO of shipping giant A.P. Møller - Mærsk A/S, stated in an interview that it may take several months to reopen the crucial Red Sea trade route, which could have an economic and inflationary impact on the global economy, businesses, and consumers.
Vincent Clerc stated that there are &#34;no winners&#34; in the Red Sea conflict:
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We are unsure whether we can establish safe passages into the Red Sea in a matter of days, weeks, or months, which could have a significant impact on global growth.
Inflation has become a major concern, putting cost pressures on us, our customers, and ultimately European and American consumers, which may cause significant disruptions at the end of January, in February, and early March.
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A.P. Møller - Mærsk A/S is a global leader in trade, accounting for about one-fifth of global shipping. In mid-December, one of A.P. Møller - Mærsk A/S' vessels was attacked, leading to the suspension of its Red Sea route. Last week, A.P. Møller - Mærsk A/S announced that all vessels transiting the Red Sea/Aden Gulf will divert southward, circumnavigating the Cape of Good Hope.
Clerc pointed out that vessels will have to take a long and costly detour around South Africa, and the container ships diverting around the Cape of Good Hope will add approximately 13,000 kilometers to the distance, increasing the cost of each container by hundreds of dollars. He added:
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Due to the longer route, A.P. Møller - Mærsk A/S' fuel costs will increase by 50%. If the issue is not resolved, vessel capacity will quickly become insufficient, threatening logistics transportation and the global supply chain.
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With the surge in container freight rates, A.P. Møller - Mærsk A/S' stock price has risen nearly a quarter in the past month.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/a70d7e4e-5112-43e6-b28d-2aa6791c777e.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/a70d7e4e-5112-43e6-b28d-2aa6791c777e.png"/>
However, Clerc does not see this as a positive development, stating:
<blockquote>
Our goal is to establish safe passages and return to normal trade patterns. We are deploying all resources to achieve this.
To achieve this goal, we have to navigate around the Cape of Good Hope, but this will have consequences that will not only impact the entire industry but also have broader implications for end consumers, product supply, and the global economy as a whole.
</blockquote>

AMKBY

A.P. Møller - Mærsk A/S CEO warns that the Red Sea conflict will ultimately bring inflationary pressures to European and American consumers, causing significant disruptions in late January, February, and early March.

No hope for short-term resumption? A.P. Møller - Mærsk A/S CEO: Interruption of the Red Sea route may last for several months.