Red Sea container activity drops by a third due to Houthi rebel attacks, risks global trade
Since mid-November 2023, Yemeni Houthi rebels have targeted commercial ships in the Red Sea. They assert they are only attacking ships linked to Israel and, more recently, those connected to the United States and Great Britain. This strategy is seen as an attempt to put pressure on the ultra-right-wing government of Benjamin Netanyahu in Israel.
Feb 1, 2024 | updated: 4:32 AM EST, March 7, 2024
According to data from the U.S. Department of Defense, the Yemeni rebel Houthi movement attacked commercial ships over 30 times in November 2023. The attacks were primarily near the coasts of Yemen, in the Gulf of Aden and the Red Sea.
Consequently, carriers increasingly diverge from the shortest route from Asia to Europe, which passes through the Indian Ocean, the Red Sea, and the Suez Canal. They now opt for a longer route around Africa, which entails an additional 10-14 days and approximately 3,730 miles.
International trade in limbo
This development has dealt a hefty financial blow to Egypt, which had previously profited heavily from using the Suez Canal. The PortWatch platform by the IMF reported a 37% reduction in transit volume through the Suez Canal during the first 16 days of January compared to the corresponding period last year.
There have also been declines in oil and liquefied natural gas (LNG) transportation. Before the crisis, around 12% of oil and 8% of LNG bulged through the Suez Canal. Recently, Al Jazeera reported a nearly 50% reduction in oil deliveries from the Middle East to Europe due to continuous attacks by the Houthi rebels.
Producers are enduring losses as well. Citing India's Export Promotion Council, the online edition of the newspaper "Asharq Al-Awsat" reported that the increased risk and diversion of ships have caused the cost of shipping a container from India to Europe to nearly double.
Jihad Azour expressed that this situation could be temporary. However, he did not discount the possibility that this might mark the beginning of significant changes in the volume of maritime trade.
