Shipping, Logistics Industries Lose Patience Over Red-Sea Standoff (image@Maersk)The Houthi attacks on the vessels passing through the Red Sea has caused cavernous disruption to the international trade. The rerouting of the ships passing through the Bab al-Mandeb Strait to the Cape of Good Hope of South Africa has caused extensive freight rates, disrupted the schedules and equipment supplies. The militant group of Yemen started to attack vessels passing through the Bab-el-Mandeb Strait of the Suez Canal in the Red Sea, accentuating their support for Hamas, the political power of Gaza.
Due to the spate of attacks, shipping and logistic industries started to lose patience over the Red Sea crisis. Vessel carriers has started to impose Emergency Revenue Charges for cargoes to and from the Red Sea. International shipping and container transportation company Hapag-Lloyd, which is also the 4th biggest logistic company in the world, has started to impose revenue charges for the delay in the arrival of the vessels. Individuals close to the developments voiced “frustration” as Maersk, one of the largest international container shipping companies also started to impose TDS (Tax Deducted at Source) and ECS (Electronic Clearing Service) for non-spot banking.
Germany’s Hapag-Lloyd issued ERC (Emergency Revenue Charges) of $10000 USD on shipment from Malaysia’s Port Klang to Djibouti of Horn of Africa, which was delayed for two months to reach the destination. The surcharges by the company ranges from $250 to $1,000, depending on the route and container size. Hapag-Lloyd said it would re-route 25 ships by the end of the year to avoid the Red Sea.
Individuals close to the developments say that all carriers that have been using the Red Sea route are charging “excessive costs”, as some of them had to pay $5000 USD, added with the redirection costs.
The frustrated vessel owners suggest to not to pay the extra charges to see what the liners would do. They call to stand firm on their stance. However, individual who is familiar with the logistic industry said that there is no point in taking actions against the carriers “even if you are traveling or using their services as cargo agent”.
As per survey by British Chambers of Commerce (BCC), 55 percentage of the exporters reported about the higher shipping costs and delays. So did the 53 percentage of manufacturers and business-to-consumer services firms. Total of 37 percentage of the companies of all types of businesses were effected by the attacks.
BCC head of trade policy, William Bain said their research suggests that the longer the situation in the Red Sea persists, the more likely it is for the costs to mount.
Houthis, the militant group of Yemen has started attacking commercial vessels passing through Red Sea on November 19, 2023. The Yemeni group intensified the attacks on ships passing through Suez Canal, voicing their support for Hamas, the resistance group of Gaza, which is fighting against the Israeli occupation force. Houthis declared that ships that have any sort of link to Israel will be targeted.
Red Sea is significant for the global trading as more than 30 percentage of global containers and 12 percentage of global trade are depended on the region for the easy and cheap transport of the commercial shipping.
Since the Houthis hulked up their attacks, despite the warning and counter attacks from US and its allies, four out of the world’s five largest shipping companies have suspended their route through the Red Sea. So far, over 95 percentage of the vessels have been re-routed through South Africa’s Cape of Good Hopes, which take 4000-600 nautical miles and an additional 14 to 20 days of journey.
After US, UK and their allies started to attack Yemen claiming to protect the ships passing through Red Sea, Houthis announced that they have “banned” ships linked to Israel, US and UK from sailing in the surrounding seas. The militant group said they would reinforce their military campaign in the region, which they claim to be in support of the Palestinians of Gaza.
As Israel continue to pummel Palestine with the genocidal bombing, Red Sea, the once busiest global trade route has started to become fully militarised.