World Trade Have Been Disrupted As More Shipping Companies Dodge Red Sea Fearing A Potential Houthi Attack
The situation along the Red Sea is growing worrisome as more shipping companies decide to dodge the route in light of Houthi militants targeting container shipments. Hong Kong”s OOCL is the last shipping company to stop transiting along the Red Sea due to the unrest.
“The situation remains fluid; things could change quickly, which is why contingency plans that include plans A, B, and C are critical to keeping supply chains moving,” Reuters reported, quoting Matthew Burgess, vice president of global ocean services at C.H. Robinson Worldwide.
“Up to this moment, we have guided OOCL-operated vessels to either divert route or suspend sailing to the Red Sea,” Hong Kong-headquartered container group OOCL told Reuters in a statement on Thursday, the first time it had confirmed pausing sailings.
Meanwhile, global furniture seller IKEA and Finnish elevator maker Kone have informed their customers about the potential cargo delays and product shortages. Goods that travel by container, including apparel, toys, and food, are most at risk; other products are being delayed.
US soybean exporters are contemplating switching shipments from the drought-stricken Panama Canal to the Suez Canal and making moves to transit the containers via trains to the West Coast to access ships that go directly to China and other Asian markets to avoid significantly longer alternate voyages around South America or Africa.
“You”ve got all these imperfect options available,” said Mike Steenhoek, executive director of the Soy Transportation Coalition.
If the unrest persists along the Red Sea, retailers could start running low on some goods by February, analysts warned. “We are more experienced having gone through COVID,” said Sur, whose firm counts retailers among its clients.
Meanwhile, Greece has decided to join the U.S.-led Operation Prosperity Guardian alliance in order to guard the ship that passes along the Arabian Sea. The country announced that it would send a naval frigate to the area to help protect shipping. This is a significant move, given that Greek shipowners control about 20% of the world”s commercial vessels in terms of carrying capacity.
Earlier, German international shipping and container transportation company Hapag-Lloyd AG had decided to dodge the Red Sea Route. Hapag-Lloyd AG on Friday instructed their container ships to avoid the Red Sea Route.
Many other leading container shipping and tanker companies, such as Mersk, Evergreen Line, and BP, had already decided to avoid the Red Sea Route in order to escape from Houthi rebels who launched attacks on the ships in protest against Israel’s Gaza attack.
The Houthi rebels are targeting ships travelling through the Bab al-Mandab Strait, also known as the Gate of Tears, which is a channel 20 miles (32km) wide, with drones and rockets declaring their support to Hamas, a Palestinian militant group that is fighting against Israel in Gaza. The Houthis argue that they were targeting the ships that carry goods to Israel.
With this, container ships have been compelled to take longer routes around Africa, which has cost them heavy operation expenses. The Red Sea is one of the world’s most significant routes for oil and liquefied natural gas shipments, as well as for consumer goods, with nearly 15% of goods imported into Europe, the Middle East, and North Africa being shipped from Asia and the Gulf by sea. That includes 21.5% of refined oil and more than 13% of crude oil, according to an analysis by S&P Global Market Intelligence.
