Following the ongoing attacks on commercial ships in the Red Sea, the US and UK conducted air and missile strikes last night towards Houthi-controlled areas of Yemen, aiming to protect international waterways and halt further assaults on vessels travelling via the Suez Canal.
Since mid-November, the Houthi campaign in support of Hamas in Gaza has targeted commercial shipping at least 27 times. This week saw the largest Houthi attack to date when the rebel group fired 21 drones, anti-ship cruise missiles and anti-ship ballistic missiles into shipping lanes in the Red Sea.
US and UK Response to Red Sea Crisis
With the objective of putting a stop to attacks on ships in one of the world’s busiest waterways, the United States and UK have launched air and missile strikes towards regions of Yemen under Houthi control. This action is separate from the 22-nation naval coalition, Operation Prosperity Guardian (OPG), formed to defend Red Sea shipping. President Biden has expressed his readiness to authorise additional strikes on Yemen if Houthi attacks on shipping persist. He stated, “I will not hesitate to direct further measures to protect our people and the free flow of international commerce as necessary.” It is too early to tell whether this military action will effectively curtail the threats posed by Houthi attacks and restore stability to the region.
Impact of Crisis on Shipping
Vessels travelling to and from the Suez Canal, a crucial route accounting for 30% of yearly global traffic, have been significantly affected by recent attacks. Carriers have suspended services through the waterway indefinitely. Consequently shipping lines are diverting via the Cape of Good Hope route, adding at least an additional 14 days of transit for cargo bound for Europe and the US. The additional two weeks to a ship’s journey incurs higher fuel and operational costs. As a result, shipping has become slower and more expensive, leading to immediate impacts on transit times with cost increases to services resulting from multiple surcharges being applied.
Shipping lines are not expected to recommence Red Sea transits until operationally feasible and until safe passage is assured.
Chinese New Year Disruption
The Red Sea crisis comes in the lead up to Chinese New Year when there will be a closure in commerce in China for up to two weeks. We are seeing a spike in demand as the public holiday draws near, exerting upward pressure on rates and the availability of equipment. With containers sitting on vessels for an additional number of days due to longer transit times, the likelihood of container shortages escalating is high. We are already seeing equipment shortages in Ningbo and there is the imminent risk for this scarcity to extend to other ports in China.
The ongoing instability will continue to impact overall operational efficiency, creating disruption and delays across global supply chains and will have an impact on freight rates and transit times in the coming weeks.
Our focus remains on monitoring the ever-changing situation and directing our efforts on minimising impacts for customers. Should you have any questions or concerns about your shipment, please get in touch with our Customer Service Team on 01376 533039.