The shipping company announced that there will be no additional charges for detouring around the Cape of Good Hope.
Recently, it has been learned that the Norwegian car transportation company Wallenius Wilhelmsen has announced that it will not charge its customers additional fees required for the detour around the Cape of Good Hope.
It is understood that for Wallenius Wilhelmsen, avoiding the Red Sea comes with higher costs, but these costs have not been passed on to the company’s customers.
CEO of Wallenius Wilhelmsen, Lasse Kristoffersen, stated, “There has been an impact in the fourth quarter, but it is minimal. At present, we are mainly bearing the costs ourselves, and we have always been in cooperation with our customers, establishing a close partnership with them.”
After the Houthi forces attacked several commercial ships in the Red Sea, most shipping companies have chosen to avoid the area, opting for a southern route, redirecting to the Cape of Good Hope in Africa.
A detour adds 14 days to the journey, and with the increase in fuel consumption, the costs also rise.
We have now said that these are our costs. We plan to sustain this situation for a period. Whether operationally or commercially, we must find solutions because we have to bypass Africa for a considerable period of time.’
Unlike the shipping industry more affected by the spot market, the car transportation industry is suffering losses due to longer routes and a smaller market capacity.
On one hand, shipping companies are paying more for fuel, but this also leads to price increases because, with the extension of the voyage time, shipping companies can carry less cargo.
Wallenius Wilhelmsen’s total revenue for the fourth quarter, announced last week, decreased by 2% from the previous quarter.
The shipping company explained that this decline was related to “a reduction in transported volume, leading to a decrease in net freight income.”
Kristoffersen has specific ideas about what solutions he will choose rather than charging for the increased costs.
He said, “We are talking about having to reorganize the entire fleet. We need to reschedule our timelines. We need to update our customers, if this situation continues for a whole year, our overall capacity will decrease by 4-6%. It’s a completely sold-out fleet,”
“For new business and new contracts, we will price for the additional days. And for existing business, this is a bit difficult.”
Rival Höegh Autoliners has taken a different approach to the increased costs due to the extra mileage.
CEO of Höegh Autoliners, Andreas Enger, stated in the company’s fourth-quarter report released earlier this month, that the company’s transported volume has been negatively affected by avoiding the Red Sea.
Enger said in the report, “We expect that the longer voyage will have a negative impact on the transported volume, but we are systematically offsetting this impact by adjusting the freight rates and implementing surcharges.”
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