Red Sea/ Pirate attacks disrupt world trade

2024-01-06 08:39:00, Kosova & Bota CNA

Red Sea/ Pirate attacks disrupt world trade

Illustrative photo

Some shipping companies are currently avoiding sailing through the strait near Yemen because Yemen's Iran-backed Houthi rebels have repeatedly attacked ships traveling through the Bab al-Mandeb strait in recent weeks. On their way to the Suez Canal all ships must pass through this sea strait.

Bab ach-Madneb separates the Arabian Peninsula from Africa and connects the Red Sea to the Gulf of Aden - and thus to the Indian Ocean. The focus of Houthi militia attacks are ships suspected of having ties to Israel.

In response, the US formed the international military coalition OPG (Operation Prosperity Guardian) a few days before Christmas to secure shipping in the Red Sea. On December 30, 2023, the US Navy sank several boats belonging to Houthi rebels that attacked the Danish container ship Maersk Hangzhou. Shipping giant Maersk suspended all Red Sea voyages for 48 hours on Sunday, but is now considering using the route again.

If ships do not pass through the Suez Canal on their way from the Far East to Europe, then they must traverse the entire African continent. This is a longer voyage for a week, approximately 3,500 nautical miles (6,482 kilometers) more travel.

The Suez Canal, which connects the Red Sea to the Mediterranean, is the shortest route between Europe and Asia. About 12 percent of global shipping traffic passes through this waterway.

Big expenses

According to analysts, attacks by Houthi rebels have already significantly increased the cost of transporting goods. If the crisis drags on for a longer period, the prices that consumers themselves have to pay for imported goods may increase even more.

"If we take, for example, a round trip from Shanghai to Rotterdam, just one detour through the Cape of Good Hope increases fuel costs by up to $1 million," Peter Sand, chief analyst at the market analysis company based in Berlin, told DW. in Copenhagen, Xenet."

Oil shipments are at risk

About nine percent of all vessels carrying oil and gas sail through the Red Sea. Oil tankers were also targeted by Houthi rebels. British oil company BP is one of the companies avoiding this route since December 18.

"We're seeing here and now that energy supplies — whether it's oil, coal or gas — have been affected simply because of the Northern Hemisphere winter," analyst Sand said. This could have a domino effect on energy prices.

Ehsan Khoman, chief commodity market analyst at major Japanese bank MUFG, has a different opinion. He believes that attacks by Houthi rebels will not have a lasting effect on energy prices. "Vessel diversion disrupts supply chains, but not manufacturing."

Export problems

Shipment delays are also affecting container ports across Europe, Lars Jensen, director of Vespucci Maritime, a Denmark-based consultancy, told DW. "Let's say I have a port that handles 50,000 containers a week. If nothing arrives one Sunday, and 100,000 containers arrive the next Sunday, that can lead to congestion," says Jensen.

The Red Sea crisis brings back memories of March 2021. At that time, the Suez Canal was blocked for six days after being blocked by the ship Ever Given. At the time, the world was in lockdown due to the corona pandemic, while global trade supply chains were severely damaged.

Hundreds of ships were stranded in the Red Sea for weeks. Container shipping costs increased from $2,000 (about €1,800) to $14,000 (over €12,000). The crisis caused further delays in importing goods from Asia for months.

The US and its allies are strengthening maritime security

As part of the multinational operation to protect maritime trade in the Red Sea, the United Kingdom, Bahrain, Canada, France, Italy, the Netherlands, Norway, Seychelles and Spain conduct joint patrols in the southern Red Sea and the Gulf of Aden.

Although US and British warships in the area have begun targeting the Houthis with missiles and drones, it is unclear whether the presence of a larger naval force will be enough to fully prevent attacks.

The Houthis, who control large parts of Yemen, see themselves as part of a self-proclaimed "axis of resistance" directed against Israel. In addition to the radical Hamas, there is also Hezbollah in Lebanon, which is also supported by Iran./ DW