The Red Sea and Gulf of Aden, two strategic waterways that connect Asia and Europe via the Suez Canal, have become too dangerous for commercial shipping, as Houthi militants from Yemen have launched a series of drone attacks on vessels in the area.
Several shipping giants, including Denmark’s Maersk and Germany’s Hapag-Lloyd, have announced that they will reroute their ships to the Cape of Good Hope, a longer and more expensive route around the south of Africa, to avoid the security risks posed by the Houthis.
The decision, which affects around 30% of global container trade, is likely to disrupt global supply chains and drive up freight rates, as the longer journey takes capacity out of the market and delays deliveries.
Why Are The Houthis Targeting Ships?
The Houthis are a rebel group that has been fighting a civil war against the internationally recognized government of Yemen since 2014, with the support of Iran. They control most of northern Yemen, including the capital Sanaa, and have launched missiles and drones at Saudi Arabia and its allies, who back the government.
The Houthis say they are pursuing Israel and all Israel-bound vessels as a result of the war in the Gaza Strip, which erupted in May 2023 and killed more than 2,000 people, mostly Palestinians. Israel has accused Iran of supplying the Houthis with weapons and technology to attack shipping in the region.
The Houthis have also claimed responsibility for several attacks on oil tankers and cargo ships in the Red Sea and Gulf of Aden, saying they are defending Yemen’s sovereignty and resources from foreign aggression.
How Are The International Community and The Shipping Industry Responding?
The attacks have alarmed the international community and the shipping industry, who have called for urgent action to protect the vital maritime routes and ensure the safety and security of seafarers.
On Monday, US Defense Secretary Lloyd Austin announced the formation of an international taskforce, including the UK, Bahrain, Canada, France, Italy, the Netherlands, Norway, Seychelles and Spain, to jointly address the security challenges in the region.
According to a report by CNBC Africa, the taskforce will provide naval escorts, intelligence sharing, and capacity building to counter the Houthi threat, Austin said. The UK, Italy, and Spain have already committed to send naval vessels to join the taskforce.
The shipping industry, meanwhile, has welcomed the initiative, but said it was not enough to guarantee the security of the route. Maersk, the world’s largest shipping company, said it was pleased to see the global response, but that it remained difficult to determine when a return to the route would be possible.
The company said it had around 20 vessels on hold, half of which were east of the Gulf of Aden and the other half in the Red Sea or the Mediterranean Sea. The vessels will start on the longer journey as soon as operationally feasible, the company said.
What Are The Implications of The Re-routing for Global Trade and The Environment?
The rerouting of the ships to the Cape of Good Hope will have significant implications for global trade and the environment, as the route adds about 10 days and 5,000 nautical miles to the journey between Asia and Europe.
According to analysts at UBS, the route reduces the effective capacity of an Asia-Europe trip by 25%, meaning fewer ships will be available to transport goods. This could lead to higher freight rates, longer delivery times, and increased costs for consumers and businesses.
The route also has a negative impact on the environment, as the ships will consume more fuel and emit more greenhouse gases. According to a study by the International Council on Clean Transportation, the rerouting could result in an additional 1.5 million tonnes of carbon dioxide emissions per year, equivalent to the annual emissions of 320,000 cars.
However, the shipping industry is currently in a state of oversupply, following the pandemic-induced slowdown in 2020 and 2021. This could ease the overall disruption and pressure on the supply chains, as the demand for goods has not fully recovered to pre-pandemic levels.
The industry is also hopeful that the situation in the region will improve soon, as the international taskforce and diplomatic efforts work to restore peace and stability. The UN envoy for Yemen, Martin Griffiths, said on Tuesday that he was optimistic that a political solution to the conflict was possible, and that he was working with all parties to achieve a ceasefire and resume talks.
