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February 27, 2024

Shipping Disrupted as Attacks Escalate in Strategic Red Sea

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Jan 19, 2024

Houthi Rebels Continue Missile Strikes, Despite International Pressure

A series of attacks on commercial ships transiting the Red Sea has disrupted global shipping and raised concerns over the security of one of the world’s busiest maritime trade routes. Yemen’s Houthi rebels have claimed responsibility for multiple missile and drone strikes targeting vessels over the past week, exacerbating an already tense situation.

On January 15th, a Houthi missile struck a commercial tanker operated by an American company off the coast of Yemen, marking the third such attack in less than a week [[1]]. The rebels warned they would continue targeting “aggressor countries” and their economic interests after the US and UK launched retaliatory airstrikes against Houthi-held territory last week.

While no ships have been sunk, insurers and shipowners are increasingly wary of sending vessels through the Red Sea, a critical choke point that sees over $1 trillion in annual trade. Some major firms like Shell have already suspended operations along the route [[2]].

Shipping Giants Reroute Vessels, Causing Delays and Higher Costs

The attacks have forced shipping companies to reroute cargo vessels around the southern tip of Africa, adding weeks to transit times and driving up fuel and insurance costs.

Container shipping giant AP Moller-Maersk has diverted more than 10 vessels away from the Red Sea since January 10th and will continue adjusting routes until the security situation improves. UPS, FedEx, CMA CGM, and other logistics firms have taken similar actions [[3]].

Overall, analysts estimate over 200 total ship detours from the Suez Canal and Red Sea since attacks began in early January – more than triple the number seen during the height of pandemic lockdowns [[4]]. The longer journey times are expected to worsen existing supply chain issues, drive up consumer prices, and have ripple effects across industries.

Shipping Company Confirmed Red Sea Diversions
AP Moller-Maersk 10+
CMA CGM 5+
Evergreen Marine 7+
UPS 2

(Table showing major shipping firms and number of route changes away from Red Sea, per company statements and media reports.)

Food, Energy, and Manufactured Goods Face Disruptions

The Red Sea route is vital for trade between Europe, Asia, and the Middle East, including critical products like food, energy, and consumer goods.

Yemen already faces widespread food insecurity after years of conflict, and aid groups warn the latest turmoil could further jeopardize imports the country relies on [[5]]. Major agricultural exporters are having to find alternative ways to fulfill existing contracts.

At the same time, Middle Eastern oil and gas producers are struggling to maintain shipments to key markets like Europe and Asia. Qatar, the world’s top LNG exporter, has warned of gas shortages and price spikes if vessels cannot safely access regional ports [[6]].

Manufacturers are also dealing with delays as supply chains absorb the loss of crucial shipping capacity. Garment factories in Bangladesh and other countries rely on steady textile imports from China and clothing exports back to Western retailers [[7]]. Red Sea attacks and subsequent fallout have already led some firms to miss delivery windows.

Prolonged trade obstructions could have severe economic consequences given the significance of Red Sea routes to the global economy. However, resolving the underlying Yemen conflict poses major political and humanitarian challenges for world leaders.

International Community Struggles with Response

The UN and Western powers have strongly condemned Houthi attacks in recent weeks but have limited options to de-escalate hostilities. Despite airstrikes and heated rhetoric, missile launches have continued unabated.

Insurers have raised premiums tenfold or refused coverage altogether for certain high-risk shipping routes, leaving vessel operators few choices other than avoiding the area. Lloyd’s of London has advised members to consider suspending Red Sea transit [[8]].

Analysts say the Houthis likely feel emboldened by military support from Iran as they try to gain leverage in stalled peace talks. Other experts caution that overreactions from the US or allies could draw countries like China deeper into the Yemen conflict given its economic interests in regional stability [[9]].

With maritime tensions still elevated, most observers expect further disruptions to Red Sea shipping in the near term. But the ultimate consequences will depend on whether underlying political dynamics shift to enable de-escalation.

References

  1. https://www.aljazeera.com/news/2024/1/15/yemens-houthis-hit-us-owned-ship-in-missile-attack-us-military-says
  2. https://www.nationalreview.com/news/gas-giant-shell-pulls-tankers-from-red-sea-passage-amid-houthi-rocket-attacks/
  3. https://www.joc.com/article/red-sea-attacks-reset-gameplan-container-shipping-2024_20240117.html
  4. https://www.cnbc.com/2024/01/18/red-sea-crisis-already-bigger-issue-for-shipping-than-covid-data-show.html
  5. https://www.bloomberg.com/news/articles/2024-01-19/red-sea-attacks-disrupt-food-trade-and-risk-higher-grocery-prices
  6. https://www.hindustantimes.com/videos/world-news/qatars-big-warning-to-west-over-gas-supply-after-attacks-on-houthis-if-you-we-want-101705434182414-amp.html
  7. https://asia.nikkei.com/Politics/International-relations/Red-Sea-conflict-plunges-Bangladesh-garment-makers-into-the-red
  8. https://www.insurancejournal.com/news/international/2024/01/16/755775.htm
  9. https://www.wsj.com/articles/the-houthis-china-and-other-dangers-to-commerce-on-the-seas-trade-vessels-yemen-bf447f8c
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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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