Red Sea Attack: Global Shipping Coys Warn of Imminent Trade Disruption

Shippers across the world are switching away from the Red Sea after Iranian-backed Houthi militants in Yemen stepped up attacks on vessels in the Gulf region to show their support for Palestinian Islamist group Hamas fighting Israel in Gaza.

Maersk is diverting all container vessels from Red Sea routes around Africa’s Cape of Good Hope for the foreseeable future, warning customers to prepare for significant disruption, while Hapag Lloyd tallied a big increase in costs of diverting ships.

The trip round Africa can add about 10 days to journey times and requires more fuel and crew-time, jacking up shipping costs.

Denmark’s Maersk (MAERSKb.CO) had said earlier this week it would pause all vessels bound for the Red Sea following an attack on one of its ships by Houthi militants, and has since begun redirecting ships around Africa.

“The situation is constantly evolving and remains highly volatile, and all available intelligence at hand confirms that the security risk continues to be at a significantly elevated level,” Maersk said in a statement on Friday.

As a result, the company, which controls about one-sixth of global container trade, will divert all Maersk vessels around the Cape of Good Hope “for the foreseeable future”.

The news will deepen concerns about a prolonged disruption to the delivery and supplies of goods from clothing to cars even after the United States on Dec. 19 launched a multinational operation to try to safeguard commerce in the Red Sea.

Trade Disruption

Houthi militants attacked one of Maersk’s container vessels in the Red Sea on Jan. 1, with assailants trying to board ship.

India is providing protective escorts to Indian container ships in the high seas around the Red Sea.

Hapag Lloyd (HLAG.DE) incurred costs in a two-digit million euro range between Dec. 18 and Dec. 31 after diverting 25 ships, a company spokesperson told Reuters on Friday.

Journeys have been delayed by between one and three weeks, depending on the area, the spokesperson said.

Reuters/Hauwa Abu