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Houthi Attacks’ Influence on the Global Trade

 

Cargo ships waited in the Red Sea near the opening of the Suez Canal on March 29, 2021. Recent attacks by Houthi rebels on ships in the Red Sea have disrupted global supply chains. (Sima Diab/The New York Times)

Since mid-November 2023, the Houthis’ actions in the Red Sea have posed a serious challenge to the safety of international commercial shipping, forcing many shipping companies to seek alternative routes to transport cargo. The number of container ships at the mouth of the Red Sea on their way to or from the Suez Canal was 90% down in the first week of January compared with the beginning of 2023.

Many major container shipping companies have changed their usual delivery scheme, re-routing their vessels around Africa to avoid the Red Sea. However, this led to an increase in the delivery time from Asia to Europe from 7 to 20 days, as well as higher prices.

Companies such as the BP OIL UK, CMA CGM France, Hapag-Lloyd, Swiss-based global container shipping company MSC and Danish A.P. Moller-Maersk have already announced the suspension of shipping through the Red Sea.

The current situation emphasizes more than ever the need to explore alternative routes to transport cargo from Asia to Europe. Just as the Suez Canal once made it possible for ships to sail from Europe to Asia and vice versa without bypassing Africa, and the Panama Canal removed the need for ships travelling from New York to San Francisco to bypass all of South America, today the Northern Sea Route (NSR) is seen as the shortest route between Europe and Asia, even compared to the currently used shipping lanes via the Suez Canal.

Does cargo traffic along the NSR have a potential to grow, given current geopolitical situation in the Middle East and ice melting caused by climate change? To learn more, read the following material: Facing Confrontation in The Middle East: A New Impetus to the Arctic Routes?

 
19.01.2024