Danish shipping giant Maersk has imposed two additional surcharges on freight services along its key routes, including those to Kenya. This move subjects traders to increased costs, leading to higher prices for consumers, despite the Kenya Maritime Authority’s (KMA) request to halt the new charges pending discussions with stakeholders.
The Kenya Maritime Authority has twice communicated with Maersk, seeking a suspension of these fees amid strong objections from the Shippers Council of Eastern Africa (SCEA). The council represents the interests of cargo owners—both importers and exporters—in the region.
Maersk, which handles the largest portion of imports and exports through the Port of Mombasa, accounting for 28% of the total throughput, has introduced emergency surcharges linked to the Red Sea situation and peak season fees. These range from $300 (approximately Sh38, 931) to $2,000 (about Sh259, 540), depending on the container’s size, type, and destination.
Earlier, on July 15, the company introduced a surcharge of $13 (Sh1, 687) to $151 (Sh19, 595), based on the container’s specifications.
In a recent advisory, Maersk’s parent company, A.P. Moller, explained, “To continue providing global services, Maersk is increasing the peak season surcharge for destinations including the United Arab Emirates, Bangladesh, Bahrain, and others to Djibouti, Tanzania, Somalia, Kenya, and Sudan, effective August 1, 2024.” The firm also noted that these rates are in addition to other applicable charges, such as local and contingency fees.
The ongoing crisis in the Red Sea has significantly impacted Maersk’s operations, extending beyond its Asia-Europe network to affect its global services.
Despite the KMA’s intervention, the surcharges remain in effect. The authority has challenged the surcharges, stating they contradict the tariff review process and requested Maersk to justify the changes, quantify any losses, and detail the duration of the charges.
KMA intended to engage with stakeholders and the shipping lines to address the situation collaboratively. In correspondence, KMA emphasized that Maersk is expected to submit any tariff changes for approval, urging an immediate suspension of the surcharges.
The shipping line has not complied, maintaining the surcharges. SCEA CEO Agayo Ogambi expressed concern, stating, “SCEA has been waiting for Maersk to rescind the decision… It is a very difficult time for shippers, with three increases in less than a month.”
Ogambi warned that the additional fees would raise business costs, potentially prompting other shipping lines to implement similar charges. At the Port of Mombasa, other key players include Mediterranean Shipping Company (MSC), which handles 18.9% of total throughput, and China’s CMA CGM, accounting for 13.9% of containers.
Shippers have cautioned that the new fees will increase the cost of exporting a 20-foot container from Mombasa by over 13%, thereby raising overall shipping expenses. SCEA estimates that the initial surcharge alone will add Sh27.5 million to the annual export cost of 20-foot containers through Maersk, escalating from Sh204.9 million to Sh232.4 million, based on 2023 volumes. The industry is expected to incur an additional Sh51.2 million annually for 40-foot containers, raising costs from Sh486.8 million to Sh537.9 million.
Moreover, the importation of 20-foot containers will cost the industry Sh501.9 million more annually, increasing from Sh3.3 billion to Sh3.8 billion. For 40-foot containers, the annual import cost will rise by Sh653.3 million, from Sh5.3 billion to Sh5.9 billion, based on Maersk’s 2023 throughput share and current exchange rates.
“These surcharges will negatively affect ongoing efforts to encourage a shift from air to sea freight, an initiative gaining momentum, particularly in response to climate and carbon reduction demands, especially in Europe,” said Ogambi.
Maersk’s Profits Drop after Months of Red Sea Crisis.
The Danish shipping giant recently posted a 45-percent fall in net profit in the second quarter, as supply chain disruptions due to the Red Sea crisis led to higher operating costs. Months of attacks by Yemen’s Iran-backed Houthis have prompted some shipping companies to detour around southern Africa to avoid the Red Sea route which normally carries about 12 percent of global trade. In the April to June period, Maersk posted a net profit of $798 million, while sales dipped to $12.77 billion, both slightly lower than analysts’ forecasts.
Operating profit also declined, by 26 percent to $2.14 billion.
“The situation in the Red Sea remains entrenched, which leads to continued pressure on global supply chains. These conditions are now expected to continue for the remainder of the year,” Maersk chief executive Vincent Clerc said in a statement.
“We have invested in additional equipment in all our businesses to adapt to the situation and continue supporting our customers through the disruptions,” he said. Recently, Maersk raised its full-year underlying operating profit forecast by $2 billion to between $9 billion and $11 billion, due to higher freight costs resulting from the Red Sea crisis.