Shipping companies

The famed biblical red sea--that   great sea parted by God to rescue the Israelis from captivity is in the news again. This time it is because Houthi rebels have been disrupting the commercial ships traversing the red sea. Two shipping companies operating container ships along the red sea were disrupted causing a higher demand for ships and an increase in freight rates. Thus A.P Miller Maersk,  a Danish shipping company whose ships are traversing Red Sea shipping lanes said their profits jumped after continued disruptions in the Red Sea shipping lanes. There is a robust demand for its container ships. Freight rates are high. In its report on Thursday the company said net profit rose to $3.05 billion from $521 million in the same period the prior year. At the end of last year Houthi rebels began attacking commercial vessels that sailed the red sea and therefore these commercial vessels were forced to find longer routes to avoid the red sea. The disruption created a shortage of vessels and port bottlenecks pushed freight rates up. Overall revenue in its ocean business rose to 11.11 billion from 7.9 billion as freight rates rose 54% on the year. Maersk said profitability in the main shipping business was substantially higher in the third quarter compared with the second because the higher container demand from prevailing supply chain disruptions in the Red sea and Gulf of Aden. German peer Hapag Lloyd followed Maersk by also raising its full year guidance last week as it continued to also see strong demand and higher freight rates. This story is connected to the US dockworkers strike because, as the WSJ story says, "container lines have also benefited from the early peak shipping season this year as retailers moved early to stock up for the holiday season ahead of the US dockworkers strike in October."