Trade flow through the Red Sea has been disrupted since 14th of December 2023, after a series of attacks by Houthi rebels on commercial vessels near the Yemeni coast. In response, A.P. Moller-Maersk, the world's second-largest container shipping line, declared the suspension of its ships' transits through the Red Sea with most other major container shipping lines following suit.
Most of the east-west bound container traffic took the alternative route around the Cape of Good Hope in South Africa, adding approximately 3000 nautical miles and roughly 10 days to the journey between China and North Europe, and up to 15 days on some Mediterranean routes. Over 500 vessels, totalling around seven million TEU, have diverted, and this number continues to rise.
Tensions have since escalated after 12th of January 2024, leading to targeted air strikes by the US and UK against Houthi rebel sites in Yemen. The strikes are claimed to be in self-defence of UK and US warships in the region and in response, the Houthis’ deputy foreign minister has warned of a "heavy price" for the aggression.
On 15th of January 2024, American officials reported a Houthi missile striking a US-owned ship off the Yemen coast, marking over 25 attacks on vessels in the region.
A week after US president Joe Biden admitted airstrikes were not preventing Houthi attacks on shipping, another missile attack last night forced two Maersk vessels to abandon their naval convoy and flee the Red Sea.
US-flagged Maersk Detroit (pictured above) and Maersk Chesapeake were under escort by US naval vessel USS Gravely and were carrying military supplies when Houthi militants attacked them with a barrage of missiles.
The Suez Canal Authority (SCA) saw vessel traffic fall 30%, and revenue by 40%, between 1 and 11 January, according to Alphaliner data.
A US-owned cargo ship is hit by a missile, and UK Prime Minister Rishi Sunak justifies air strikes in parliament.
"Since the 19th November the Houthi's have launched over 25 attacks on commercial shipping and on the 9th January, they launched a direct attack on UK and American warships... it was the biggest attack on the Royal Navy for decades, and so we acted. We did so in self defence."
Rishi Sunak, UK Prime Minister
US and UK, supported by allies, conduct air strikes on Houthi rebel sites in Yemen. The strikes are claimed to be in self-defence of UK and US warships in the region.
HMS Diamond and US warships repel a large Houthi rebel drone attack, hinting at potential military action.
"The UK, alongside allies, have previously made clear that these illegal attacks are completely unacceptable... we will take the action necessary to protect innocent lives and the global economy."
Grant Shapps, UK Defence Secretary
Maersk revert on plans to transit through the Red Sea after an attempted attack. The attack was blocked by the US Navy, Operation Prosperity and the ship’s own security team.
Danish shipping giant Maersk has said it is preparing to resume shipping operations through the Red Sea and Gulf of Aden.
Other major shipping lines, including MSC, Hapag-Lloyd, COSCO, and HMM have suspended movements through the Red Sea and diverted around the Cape of Good Hope.
U.S. Secretary of Defence, Lloyd Austin, announced the formation of an international maritime security force named Operation Prosperity. Their goal is countering threats by Houthi forces against international maritime commerce in the region.
A.P. Moller-Maersk announces the suspension of Red Sea transits, leading to a domino effect among major shipping lines.
The Maersk Gibraltar survives a missile attack, prompting Maersk to suspend Red Sea transits.
OOCL box ship Number 9 is hit by a rocket near the Yemen coast.
Houthi rebels seize the Galaxy Leader cargo ship, claiming it as Israeli-owned.
Houthi rebel leader announces the search for Israeli vessels in the Red Sea.
With approximately 12% of worldwide trade passing through the Red Sea, including 30% of global container traffic, billions of dollars' worth of traded goods and supplies navigate through this crucial pathway. Avoiding this route adds significant costs and time for shippers, with an estimated 1.5-2 million TEU taken out of the market due to longer transit times. The situation also affects shipping schedules, causing capacity crunches and port bottlenecks.
Despite the challenges, the broader shipping context indicates that the industry was grappling with excess capacity in the second half of 2023. Rates had hit bottom just 12 weeks before, and with substantial new tonnage entering the market in 2024, there is ample space. However, the current issue lies in disrupted schedules, impending Chinese New Year pressure, and containers being in the wrong places. As carriers introduce more capacity onto east-west trade lanes, higher rates on other routes with limited space are expected.
We understand that these developments may have an impact on your planning, but we want to reassure you that our dedicated team is here to support you through these challenges.
We will continue to monitor the situation closely and provide you with updates as needed. If you have any questions or require further information, please do not hesitate to contact our team.