Shipping giants halt Red Sea route in blow to global trade
Spiralling attacks on merchant ships by Houthi militants off the coast of Yemen have prompted widespread trade disruption as some of the world’s biggest vessel owners evaluate whether it is safe to send crews through the Red Sea.
Two of the world’s largest container shipping lines said on Friday that they were pausing transits through the Red Sea after their vessels were attacked. Two oil tanker companies have said they are insisting on a clause in charters that will allow them to send their ships around Africa if they deem the waters off Yemen unsafe.
Maersk did not say how long the halt to shipments through the Red Sea will last. Bloomberg
The moves will pile pressure on the US and its allies to improve security along one of the world’s most important trade corridors to avoid undermining the global economic recovery. An international trade group called for more military support to end the attacks.
Houthi militants have been attacking more and more merchant ships in the Red Sea – especially vessels that they claim are connected to Israel – in response to the war in Gaza. Bab al-Mandab is a narrow stretch of water that links the Indian Ocean to the Red Sea.
AP Moller-Maersk instructed its vessels heading for the southern entrance of the Red Sea to pause their voyages after one of its carriers came under attack.
Shortly after Maersk’s announcement, Germany’s Hapag-Lloyd AG announced a halt until Monday, “then will decide for the period after”.
“Following the near-miss incident involving Maersk Gibraltar yesterday and yet another attack on a container vessel today, we have instructed all Maersk vessels in the area bound to pass through the Bab al-Mandab Strait to pause their journey until further notice,” Maersk said in a statement.
Maersk said its No. 1 priority was the safety of its crews, highlighting the challenges of balancing its customers’ needs against the requirement to look after the company’s staff.
12 per cent of global trade
While it is unclear how long-lasting Maersk and Hapag-Lloyd’s pauses will be, such steps underscore how serious and potentially economically damaging the attacks could be. Maersk owns a fleet of more than 300 ships. Hapag-Lloyd ranks eighth, according to data from Clarkson Research Services.
About 12 per cent of global trade depends on the Suez Canal and 5 per cent on the Panama Canal, according to Marco Forgione, director general at the Institute of Export & International Trade. Panama is disrupted by drought.
“They are fundamental to the flow of international trade,” he said. “Without them operating smoothly, the domino effect of damage and disruption to supply chains caused by ships delayed and in the wrong places will be substantial.”
The attacks appear to have escalated in the past several days with individual ships’ connections to Israel becoming less obvious. That suggests risks are widening for the industry at large, with insurance costs climbing. At least three container ships have been attacked or disrupted near Yemen in the past day or so.
Houthi militant attacks
Disruptions in the area can snarl supply chains and world trade. In 2021, the grounding of the Ever Given blocked Egypt’s Suez Canal for almost a week, throwing ships off schedule for months and tightening the availability of cargo space. That accident was estimated to have cut capacity by 20 to 30 per cent for several weeks.
“We are deeply concerned about the highly escalated security situation in the southern Red Sea and Gulf of Aden,” Maersk said on Friday in its statement. “The recent attacks on commercial vessels in the area are alarming and pose a significant threat to the safety and security of seafarers.”
Earlier, the Yemen-based, and Iran-backed, Houthi militants said they attacked the MSC Alanya and MSC Palatium III with naval missiles. Maersk’s vessel, Maersk Gibraltar, was the target of an attack that missed on Thursday.
The ships were targeted after refusing to respond to warnings from “Yemeni naval forces”, Houthi spokesman Yahya Saree said during a protest for Gaza.
Hapag-Lloyd, Germany’s largest container carrier, also said one of its vessels, the Al Jasrah, was attacked in the Red Sea on Friday.
Maersk’s notice on Friday did not say what would happen next. The company deals with the world’s largest retailers.
“We are committed to best possibly ensuring the stability of our customers’ supply chains, and we are working closely with all our logistics teams and are taking steps to minimise impacts to customers,” it said.
Bloomberg
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