Attacks in the Red Sea: Impact of maritime crisis on global trade

Clothing, food, computers and many products that consumers typically buy from stores are taking longer to reach their destinations amid the security crisis in the Red Sea.

Attacks by Yemen’s Houthi rebels on merchant ships sailing through the Red Sea to the Suez Canal have forced shipping companies to take a much longer and more expensive alternative shipping route through southern Africa, causing delivery delays. Is.

The attacks, which have been taking place since mid-December, are aimed at punishing Israel according to the rebel group war in gazaHave become intense.

On Tuesday, US and British forces announced they had repulsed the Houthi rebels’ “largest offensive” to date after shooting down 18 drones, two cruise missiles and one ballistic missile.

And this Wednesday, the UN Security Council approved a resolution demanding an immediate end to attacks against merchant ships in the Red Sea, including mention of the right of UN member states to protect those ships. Is.

Yemeni militias argue that they are using drones and rockets to attack ships headed towards Israel, although it is unclear whether all of the ships attacked are heading to Israeli territory.

S&P Global Market Intelligence has documented More than 20 incidents confirmed Against commercial vessels starting on 19 November.

Shipping companies including Maersk, Hapag-Lloyd and Mediterranean Shipping Company (MSC) have adopted alternative routes to transport their containers. It is the biggest maritime emergency of its kind since a ship ran aground in the Suez Canal, disrupting much of global trade in 2021.

Reuters reported that companies such as Ikea, Walmart or Amazon have experienced delays in the arrival of some products, while the increase in the cost of transporting goods is one of the main effects of the crisis.

“In recent days we have seen a dramatic increase in the cost of shipping containers on many important trade routes,” Harvard Business School professor Willy Shih tells BBC Mundo.

The price of moving a container from East Asia to Northern Europe has increased by 199% in recent weeksAccording to data from international freight transportation and market analysis company Freightos.

Although the Shanghai-Rotterdam sea route has been one of the most affected, routes linking Shanghai with Genoa, Los Angeles and New York have also suffered the consequences of the crisis in the Red Sea.

and the red sea one of the most important roads in the world For transportation of consumer goods, oil and liquefied natural gas.

This issue is even more challenging for maritime transport. “We have two simultaneous crises” that are affecting shipping routes, Shih explains.

One is the Red Sea crisis and the other is Lack of water in the Panama Canal.

In that context, any major disruption could upset the delicate balance of shipping.

How significant will be the economic impact of the Red Sea diversion?

Simon Heaney, senior manager of the Drewry Company’s container research area, tells BBC Mundo that “the economic consequences of attacks on commercial vessels in the Red Sea depend on their duration.”

Heaney argues that these types of situations “could significantly impact global supply chains and take weeks or months to recover,” with the crisis expected to come in the coming weeks. High commercial flow with the arrival of Chinese New Year on February 10.

The expert says it is likely that there will be a certain level of congestion at ports due to delays in the flow of ships.

The expert says that something positive amid all that is happening is that, so far, the impact on the energy sector “has not been felt” and argues that “there are reasons to believe that maritime transport will be able to meet the needs of the economy with sufficient capacity.” is more.” To face the challenge.

And despite the difficulties, analysts such as Peter Sand of freight rate data company Zeneta say “shipping companies are in a much better position to handle the crisis” than when the giant ship Ever Given blocked the canal. Suez in 2021.

Jack Kennedy, associate director and head of global country risk intelligence and analysis for the Middle East and North Africa at S&P Global Market Intelligence, argues that “Houthi attacks are likely to continue targeting international ships regardless of Israel’s public relationship with them.”

Despite claims by the Houthis that the attacks on shipping are entirely due to Israel’s war operations in Gaza, Kennedy told BBC Mundo, the Houthis are “looking to exert more geopolitical influence in the region and portray themselves as an actor “We are using our attack capabilities to Global importance.”

If so, the impact of the crisis in the Red Sea could further increase costs, transportation times and delays in delivery of products.

Even small delays have the potential to cause a domino effect throughout a product’s manufacturing chain.

This is explained because global supply chains work in coordination, so that each element arrives at exactly the right time to join the production line.

Any delay affects the rest of the manufacturing process of a product.

Although the problem may seem limited to shipping companies, analysts warn Consumers around the world may see some increase in the prices of products in the future.

It all depends on the development of events in the coming days and weeks.

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