On Tuesday, container shipowners abandoned one of the busiest trade routes in the world. Many of the largest cargo ships diverted to avoid the Red Sea due to the increasing attacks by Iranian-backed rebels.
AP Moller Maersk, the second largest container shipping company in the world, has become the latest to reroute their vessels around Africa via Cape of Good Hope due to the “highly escalated” security situation.
The company issued a statement Tuesday saying that the attacks on commercial ships in the area were alarming, and posed a serious threat to the safety of seafarers. This decision was made to ensure the safety and security of our crews, ships and cargo.
MariTrace is a service that tracks ships. As of Tuesday night, only 210 vessels were crossing the Red Sea on the route from and to the Suez Canal. This was one of the largest changes in the international trade routes since Russia invaded Ukraine at full scale nearly two years ago. In comparison, there were approximately 330 vessels that traversed the region in March.
The changes came as Iran-backed Houthi Rebels in Yemen intensified a campaign against ships that pass through the Red Sea’s Bab-el-Mandeb Strait, a narrow strait at the southern mouth of the sea within easy range of Yemen-based drones and missiles.
Houthi leaders claim that their campaign is a response to Israel’s attack against Hamas which is also supported by Iran. Since the conflict began there have been at least 10 attacks against ships in the region, and the US Navy has reported that it has foiled as many drones strikes.
Lloyd Austin, US Defence Secretary, announced an agreement to extend a naval taskforce deployed in the Red Sea.
Austin held a videoconference on Tuesday with countries participating in the operation, called Operation Prosperity Guardian. He also spoke to other allies and warned that the threat against the global economy will continue until more countries join the effort.
The Pentagon released a statement after the videoconference that said, “He reaffirmed that the international community faces an unprecedented global threat that requires collective action.”
According to Financial Times’ review of maritime intelligence, the majority of Houthi attacks were on ships with Israeli ties. This includes several vessels owned by the Ofer family – one the most powerful shipping families in the world.
Maersk has made a similar decision to other shipping groups. Evergreen Marine , based in Taiwan, announced this week that it “decided temporarily to stop accepting Israeli cargo immediately” and instructed container ships “to suspend navigation through the Red Sea”.
MSC rerouted some of its services on Friday, and CMA CGM in Marseille is also taking similar measures.
CMA CGM has rerouted certain vessels currently sailing from and to the US, North Europe, Asia, or the Indian Subcontinent via the southern tip Africa. Other vessels have been instructed to stop their journeys and reach safe areas until further notice.
Wallenius-Wilhelmsen announced on Tuesday that they expected the decision to reroute ships around Africa would add one to two additional weeks to the voyage duration.
Attacks in the region risk disrupting global supplies chains that rely on the Red Sea or the Suez Canal. This waterway is responsible for 30% of container traffic and is an important conduit for crude oil shipping.
Retailers are also warning about supply chain disruptions due to the vessel diverts. Ikea, the largest furniture retailer in the world, warned that the situation could “cause delays and availability constraints for certain Ikea items”.
Michael Aldwell is the executive vice-president at Swiss logistics company Kuehne+Nagel. He said that around 19,000 ships pass through the Suez Canal every year. It takes 30-40 days for an Asia-Europe journey to be completed. He added that the trip from Asia to Europe could be extended by up to four weeks if they choose this alternative route.
Maersk reported that as of Monday it had approximately 20 vessels in a paused state. Half of them were east of the Gulf of Aden, and the remainder south or north of Suez Canal. BP was the first major oil company to pause the entire shipping through the area.
Trafigura, the largest commodities trader in the world, announced on Friday that it would “take additional precautions” to protect its own and chartered vessels.
According to data provided by energy consultancy ICIS, three liquefied gas cargoes chartered by US LNG producer Cheniere and commodity trader Gunvor also appear to have diverted from the Red Sea.
According to ICIS data, a vessel chartered by Gunvor and loaded with LNG from America that was heading to Asia crossed the Suez Canal into the Red Sea. However, the vessel turned around and returned to the canal. Gunvor and Cheniere declined comment.