Estimated reading time: 2 minutes
Yemen’s Houthi militants announced on Sunday an escalation of attacks on merchant ships, expanding targeting to include vessels belonging to any company conducting business with Israeli ports, regardless of nationality.
The Red Sea and Suez Canal corridor has seen sharply reduced vessel traffic since November 2023, when the Houthis began targeting merchant ships. The group has attacked more than 100 vessels and recently sank two ships in July.
Global shipping companies are warning that the Red Sea trade route is unlikely to return to normal operations in the near future, despite hopes that diplomatic efforts could reduce regional tensions.
Lars Barstad, chief executive of oil tanker operator Frontline Management, told the Financial Times that shipowners would be reluctant to resume Red Sea operations even if regional tensions ease. “To expect owners to put their seafarers at risk passing Red Sea or Gulf of Aden anytime soon is a bit naive,” Barstad stated.
The disruption has forced numerous shipping companies to reroute vessels around Africa’s Cape of Good Hope, adding approximately 10 to 14 days to voyages between Asia and Europe. The Cape of Good Hope route is also more dangerous, with rough seas and extreme weather events leading to increased risk for ships. The route accounts for a disproportionate share of global container losses; the World Shipping Council estimates that increased transit in the region, which rose by 191% compared to 2023, is causing a sharp rise in container losses, which more than doubled last year.
Recent attacks have triggered sharp increases in fuel costs and shipping rates. Charter prices for the largest oil product tankers have more than doubled in the past week to $101,500 daily, compared to November averages of just $22,750, according to London shipbroker Gibson.
The diversions around the Cape of Good Hope increase voyage lengths by about 70% compared to the Suez route, effectively adding 5% to worldwide demand for product tankers at a time when fleet utilisation is already very high.
The continued disruption underscores the vulnerability of global supply chains to regional conflict; before the attacks began, the Red Sea route handled an estimated 12% of global trade.
