Shipping through the Red Sea has deteriorated amid more vessel attacks by Houthi militants in response to Israel’s ground offensive in Gaza. The total number of vessel attacks has quadrupled since 2022 and surpassed the previous peak recorded in 2017. Missile and grenade strikes are now the primary modes of attack, whereas attempted boardings and piracy were characteristic targeting methods of previous years.
As a result of the ongoing instability, the top 10 major commercial shipping carriers suspended operations through the waterway, opting for a diversion around Africa’s Cape of Good Hope. The diversion adds 10-14 days to the shipping journey on average and incurs additional costs, but it is more stable than transit through the Middle East. A U.S.-led maritime coalition is expected to begin stabilization efforts in the region, though measurable results are likely to take time. The Houthi militants have stated that vessel attacks will persist so long as Israel’s ground offensive continues.
Major container shipping lines suspend transit through the Red Sea
Shipping volumes through the Red Sea and the Suez Canal have significantly decreased since the attacks began earlier this month. Since December 12, container capacity has rapidly declined to 12.7% of normal carrying capacity. Major container shipping lines MSC, CMA CGM Group SA, Hapag-Lloyd, COSCO, Evergreen, and Maersk have all suspended operations through the Red Sea and Suez Canal. Roughly 12 out of every 14 container vessels that would normally use the route are now avoiding the region altogether.
Suspensions disproportionately impact trade between Europe and Asia, with container capacity between the two regions decreased by 25%. Continued disruptions will likely create problems for the redistribution of empty containers to various ports around the world, increasing the likelihood of container shortages during the new year peak.
As an alternative to the Suez Canal, carriers have begun sending vessels south, around Africa’s Cape of Good Hope. More than 100 container vessels have been routed this way since the start of the crisis. This route nearly doubles transit time between Asian and European ports, going from approximately 8,500 miles over 26 days to 11,800 miles over 36 days. Some of the containers and cargo coming from Asia typically continue to the U.S. East Coast ports of New York, Norfolk, Charleston, or Savannah.
U.S. led maritime coalition to begin stabilization efforts
A U.S. led maritime coalition is expected to move into the region to counter the vessel attacks and stabilize transit through the Red Sea. Operation Prosperity Guardian will bring together naval assets of Bahrain, Canada, France, Italy, the Netherlands, Norway, Spain, the Seychelles, the United Kingdom, and the United States.
Houthi militants have claimed that the coalition will not hinder their activities in the Bab al-Mandab Strait; however, most military strategists believe the coalition will reduce the threat temporarily. Countries will likely be reluctant to keep defense forces in the region for a prolonged period due to political pressures. As such, this is unlikely to result in a long-term resolution that instills enough confidence to lift shipping suspensions.
Everstream clients are receiving more detailed insights and recommendations about this risk.
Contact us to learn how we can give you a complete view of the risks affecting your end-to-end supply chain and what you can do to mitigate them.