- World’s busiest ship route avoided due to Houthi rebel attacks.
- Ship duration delayed from 19 days to 31 days.
- US to launch multinational operation to protect commerce in Red Sea.
- Experts say Israeli ships take South African route to avoid attacks.
Houthi Attacks and Loss for Maritime Industry
In support of Hamas group, Yemen-based Houthi rebels’ attacked commercial vessels that sailed in the Red Sea. The group claimed that it attacks the ships that has Israel as destination. But BBC reports that it was not clear that all attacks were only on Israel going ships or not. Houthis had attacked the international containers transporting good through Bab el-Mandeb. Also known as the Gate of Grief or the Gate of Tears, Bab el-Mandeb is a strait between Yemen on the Arabian Peninsula, Djibouti, and Eritrea in the Horn of Africa. Houthi group’s rocket and drone attack in this area made the vessels to choose different route, leading to more shipping costs and delayed deliveries.
US’s Stand on the Attack
The United States declared that it plans on an multinational operation that would safeguard maritime commerce in the Red Sea from the Houthis. Maersk released a statement stating, “As of Sunday 24, December 2023, we have received confirmation that the previously announced multi-national security initiative Operation Prosperity Guardian (OPG) has now been set up and deployed to allow maritime commerce to pass through the Red Sea/Gulf of Aden and once again return to using the Suez Canal as a gateway between Asia and Europe.”
The Impact of Russia-Ukraine War
The aftermath of Russia-Ukraine war on global trade is equally concerning. It directly affected maritime transport in Azov and Black Seas, and halted activities in Ukrainian ports and also lead to a half in exports of agricultural products. Major ports of Ukraine were closed due to Russian naval blockade of the country. The exports of the country, along with its crew members were trapped, unable to return home due to the conflict.
War on Trade and Shipping Industry
Experts say that certain Israeli-associated ships take the South African route to avoid attacks from the Houthis despite the 31 day delay. On the other hand, crude oil prices have dipped and the market is concerned about the drop in demand among other advanced economies. VOA news reports that the major impact that the Houthi escalation has causes is the increased insurance coasts for the shipping firms.
Insurance Costs Doubled-Up
Ship Operators face double the amount of insurance to sail through the Red Sea, in this case, more expensive ships has to pay even more thousands of dollars as per the findings of David Osler, insurance editor for Lloyd’s List Intelligence.
“While shippers are applying a so-called war risk charge of $50 to $100 per container to customers bringing over everything from grain to oil to things you buy off Amazon, that’s a low enough fee that it should not drive up prices for consumers.” says Osler
The insurance editor expects this situation of insurance rise to keep growing if the war situation gets even worse, which in turn would make the ship owners rethink whether to move through the region.
