Shipping Firms Pause Red Sea Journeys Over Attacks

The Houthis have been stepping up their attacks since the start of the Israel-Hamas war in October.

The group, which is backed by Iran, has been using drones and rockets against foreign-owned vessels transporting goods through the strait of Bab al-Mandab - a 20-mile wide channel that splits Eritrea and Djibouti on the African side and Yemen on the Arabian Peninsula.

Ships usually take this route from the south to reach Egypt's Suez Canal further north.

But because of the attacks and the threat of future assaults, several of the world's largest shipping firms, including Mediterranean Shipping Company and Maersk, have diverted vessels away to a much longer route around Africa's Cape of Good Hope and then up the west side of the continent.

It is inevitable that supply chains will be affected due to ships being diverted away from the Red Sea, but consumer goods "will face the largest impact", according to Chris Rogers, head of supply chain research at S&P Global Market Intelligence, though he does note the current disruption has occurred "during the off-peak shipping season".

Delays to products reaching shops can be expected, with container ship journeys expected to take at least 10 days longer due to the Cape of Good Hope route adding about 3,500 nautical miles.

The extra distance will also cost companies more. Shipping rates have risen 4% in the past week and those costs could be passed on by businesses to customers.

The attacks have led the US to launch an international naval operation to protect ships in the Red Sea route, and countries including the UK, Canada, France, Bahrain, Norway and Spain have joined.

US defence secretary Lloyd Austin held a virtual meeting with ministers from more than 40 countries on Tuesday, and called on more nations to contribute to efforts to keep shipping safe in the region.

But some shipping companies are reluctant to immediately start using the route again despite increased security.

Maersk and Hapag-Lloyd, which have both have ships that have been attacked by Houthi rebels, welcomed the extra measures but said it is difficult to determine when they would go back to using the Red Sea, meaning there could be disruption for some time.