The security situation in the Red Sea worsened over the last month as commercial vessels transiting through the region continue to be targeted by Houthi rebels from Yemen via a combination of drones, missile attacks, and attempted hijackings. The Houthis are targeting commercial vessels with supposed links to Israel in the southern Red Sea near the Bab El Mandeb Strait as part of the group’s efforts to aid Hamas in the ongoing war with Israel.
Several of the world’s biggest shipping operators have either paused ongoing journeys in the region until further notice or have chosen to re-route vessels around the Cape of Good Hope in southern Africa, increasing both transit times and transportation costs for many international shipments. Companies with shipments moving through the Red Sea should prepare for weeks’ worth of delivery delays and additional transportation costs.
Number of attacks rises as Israel-Hamas war continues
Around 15 vessels have been targeted in the region since November 19, including bulk carriers and commercial container vessels. However, the rate at which commercial vessels are being targeted by Houthi militants appears to have increased over the past week with confirmed attacks on at least seven commercial vessels between December 11 and 17.
At least four of the recent attacks targeted commercial container vessels owned by major shipping lines such as A.P. Møller – Mærsk A/S (Maersk), Hapag-Lloyd AG, and Mediterranean Shipping Company S.A. (MSC), suggesting that the militants are beginning to target larger vessels to increase pressure on international shipping operators sending their vessels through the Bab El Mandeb Strait. However, missiles and drones continue to be intercepted by naval ships patrolling the Red Sea with at least 15 drones reported to have been shot down by U.S. and UK naval vessels on December 15 alone.
The recent spike in attacks indicates that the Houthis are now willing to also attack vessels without confirmed links to Israel.
Container lines cancel Red Sea transits
MSC, CMA CGM Group SA, Hapag-Lloyd, and Maersk, four of the world’s largest shipping lines, suspended vessel transits through the Red Sea. Other container lines suspending Red Sea transits in favour of the Cape of Good Hope include Israeli-owned Zim Integrated Shipping Services Ltd. (ZIM) and South Korea based HMM Company Limited. Meanwhile, Hong Kong-headquartered Orient Overseas Container Line (OOCL) has taken a more drastic approach and publicly announced that it will suspend all shipments to and from Israeli seaports as of December 16.
Shipping suspensions in the Red Sea could severely disrupt global shipping operations
The area affected by the recent spike in attacks encompasses one of the world’s most important shipping routes as all ships wanting to use the Suez Canal must travel through the Red Sea as part of their journey. Under normal circumstances, more than 10% of global trade, including 30% of all containers, moves through the area, but with many of the world’s biggest shipping operators instructing ships to pause journeys until further notice, some shipments might not be able to exit the area for weeks to come.
Meanwhile, ships being re-routed via the Cape of Good Hope at the southern top of Africa will see significant delivery delays, as journeys via this route usually take up to two weeks longer than the transit through the Suez Canal. Since November 19, 55 ships have diverted to the Cape of Good Hope route between Europe and Asia rather than the Suez Canal, according to the Suez Canal Authority.
Related insurance costs have increased significantly in recent weeks. For most of the world’s vessels, insurance costs for vessels using the Red Sea have doubled, but costs for Israeli-linked ships have reportedly spiked by 250%, with some insurance companies no longer willing to insure Israeli-linked ships at all. In total, added costs for fuel, insurance coverage and crew wages could amount to tens of thousands of dollars in additional costs, which shipping operators will likely pass on to their customers, raising transportation costs for many companies, particularly those located in Asia and Europe.
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