Economy

Commercial Navigation Faces Houthi Threats: Alternative Routes and Increased Costs

Commercial Navigation Faces Houthi Threats: Alternative Routes and Increased Costs

The Iranian-aligned Houthi movement in Yemen is intensifying its attacks on ships in the Red Sea to show support for the Islamic resistance movement (Hamas), which is engaged in conflict with Israel in the Gaza Strip. The attacks affect a vital trade route between East and West, particularly oil trade, as ships reach the Suez Canal via the Red Sea. In response, some shipping companies have instructed their vessels to instead sail around the southern tip of Africa, a slower and consequently more expensive route.

Here are the measures taken by companies:

* **C.H. Robinson**: The global logistics group announced on December 22 that it rerouted over 25 ships to sail around the Cape of Good Hope in the week prior, and this number is expected to increase. It added, “Disruptions in shipping through ports or areas will continue, and prices are set to rise for many trade movements in the first quarter of 2024.”

* **CMA CGM**: The French shipping group stated on January 5 that it has not changed its plans announced last month to gradually increase the number of vessels transiting the Suez Canal. Previously, the company rerouted several ships via the Cape of Good Hope.

* **Euronav**: The Belgian oil tanker company announced on December 18 that it would avoid the Red Sea until further notice.

* **Evergreen**: The Taiwanese container shipping company reported on December 18 that its vessels heading to Red Sea ports would wait in nearby safe waters until further notice, while ships scheduled to cross the Red Sea would be redirected to the Cape of Good Hope. It also temporarily halted accepting shipments from Israel.

* **Frontline**: The Norwegian oil tanker group stated on December 18 that its vessels would avoid the Red Sea and Gulf of Aden.

* **Gromar Car Carriers**: The Norwegian shipping company specializing in car carriers announced on December 21 that its vessels would not transit the Red Sea.

* **Hapag-Lloyd**: The German container shipping company informed Reuters on January 2 that it had decided to continue avoiding the Red Sea, rerouting its vessels to the Cape of Good Hope at least until January 9, when the situation would be reassessed. Hapag-Lloyd stated it incurred costs in the tens of millions of euros between December 18 and 31 due to rerouting 25 ships in response to the attacks in the Red Sea. A projectile believed to be a drone struck one of its ships on December 15 while it was sailing near the Yemeni coast. No crew members were harmed.

* **HMM**: The South Korean container shipping company declared on December 19 that it ordered its vessels, which usually use the Suez Canal, to reroute to the Cape of Good Hope.

* **Höegh Autoliners**: The Norwegian shipping company announced on December 20 that it would stop crossing through the Red Sea after the Norwegian Maritime Authority raised the threat level for the southern part of the sea to the highest level.

* **Klaveness Combination Carriers**: The Norwegian fleet operator stated on December 28 that it is unlikely any of its ships would sail in the Red Sea unless the situation improves.

* **Maersk**: The Danish shipping group announced on January 2 that all its shipments would continue to avoid the Red Sea until further notice. On January 5, it declared it would suspend the passage of its vessels in the Red Sea "for the foreseeable future." The company had stopped all maritime operations in the Red Sea for 48 hours on December 31 after Houthi militants attacked the Maersk Hangzhou container ship.

* **MSC**: The Mediterranean Shipping Company stated on December 16 that its vessels would not pass through the Suez Canal and had already rerouted some of them to the Cape of Good Hope after two ballistic missiles were launched at one of its ships.

* **Ocean Network Express**: The Japanese joint venture between Mitsui O.S.K. Lines, Nippon Yusen, and Kawasaki Kisen Kaisha announced on December 19 that it decided to change its ships' routes away from the Suez Canal and the Red Sea, opting instead to sail around the Cape of Good Hope or temporarily halt its voyages and move to safe areas.

* **Orient Overseas Container Line**: The Hong Kong-based company announced on December 21 that it directed its ships to change course or cease sailing to Red Sea waters. The shipping company owned by Orient Overseas (International) Limited also halted the acceptance of goods from and to Israel until further notice.

* **Wilhelmsen**: The Norwegian group announced on December 19 that it would stop all its voyages in the Red Sea until further notice, noting that redirecting the ships to the Cape of Good Hope would increase travel times from one week to two.

* **Yang Ming**: The Taiwanese shipping company stated on December 18 that it would reroute its vessels sailing through the Red Sea and Gulf of Aden to the Cape of Good Hope over the next two weeks.

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