Approximately 10% of global trade flow through the Red Sea is currently under threat after shipping giants like A.P. Moller-Maersk and Hapag-Lloyd announced the suspension of sea shipments through the Red Sea.
The move comes after the Maersk vessel was attacked by missiles from Yemeni Houthi rebels although the company reported no harm to the ship’s crew.
A spokesperson for A.P. Moller-Maersk (MAERSKb.CO) told Reuters on Friday that the Danish shipping company will temporarily halt all container shipments via the Red Sea until further notice.
It stated, “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,”
Hapag-Lloyd, holding a 7% share of the container market, has temporarily suspended Red Sea traffic until at least December 18 following an attack by Houthis on one of its vessels.
MSC, Hapag-Lloyd, and Maersk which have all announced the suspension of shipments via the Red Sea collectively command around 40% of the global trade vessel market share.
Cause of the suspension
The recent suspensions indicate a shift among significant ship charterers who, having previously employed armed guards to ensure safe passage through Bab al-Mandeb, are now reconsidering the use of this narrow strait, responsible for facilitating 10% of global seaborne oil transportation.
With the Houthis issuing threats to target ships with Israeli ownership or destined for Israeli ports, a wide range of commercial vessels, including car carriers, tankers, and dry bulkers, have been subjected to attacks, irrespective of any apparent ties to Israeli trade. About 10% of the world’s trade passes through the Red Sea.
Alternative routes
To safeguard their vessels and crew in response to threats by the Houthis, Israel-based ocean carrier ZIM has redirected its vessels away from the Arabian and Red Seas.
These ships are now taking an alternative route around the Cape of Good Hope in South Africa, adding 10 to 14 days to their travel time. This longer journey incurs higher fuel costs due to the increased distance traveled.
Since the Houthis’ threat on Saturday to attack vessels with ties to Israel, or engaged in business with the country, there have been seven incidents. In total, 13 vessels have been attacked since the onset of the Israel-Hamas war in early October.
