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Posted by admin on 2023-12-20 | Last Updated by admin on 2025-01-18 05:20:38

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The Israel-Hamas conflict continues to take a toll on world trade. Adding fuel to the fire is a series of attacks on commercial ships along the Suez Route, which includes the Suez Canal and Red Sea, disrupting major global shipping lines.

The attacks, conducted by Yemen’s Houthi rebels, have escalated in recent weeks. The group claims to support Hamas and threatens to continue attacking any company with business ties to Israel.

A Pause Amidst the Storm

"MSC," the world’s largest shipping carrier, has announced that it will no longer traverse the Suez Canal. This decision follows an attack on its container ship, the MSC PALATIUM III, while transiting the Red Sea under a subcharter to Messina Line on Friday.

Similarly, the German container shipping line Hapag-Lloyd has temporarily halted all sailings through the Red Sea until December 18. A spokesperson mentioned that this decision comes hours after one of its ships was attacked near Yemen. The spokesperson added, "Then we will decide for the period thereafter."

The attacks have prompted the French company CMA CGM to take a similar measure, instructing all its container ships in the area "to reach safe areas and pause their journey in safe waters with immediate effect until further notice."

Danish shipping company AP Moller-Maersk has also declared that all its ships currently traversing in the region will have to pause their journey until further notice, describing the situation as "alarming."

A statement from Maersk mentioned, "Following the near-miss incident involving Maersk Gibraltar yesterday [Thursday] and yet another attack on a container vessel today, we have instructed all Maersk vessels in the area bound to pass through the Bab el-Mandeb Strait to pause their journey until further notice."

Top of Form

The Houthis have claimed responsibility for a military operation targeting a Maersk container vessel, asserting that they successfully hit it directly with a drone.

The Only Option Left

By avoiding the Suez Route, ships are left with only one alternative: a much longer journey navigating around the southern tip of Africa, the Cape of Good Hope. However, Shipping experts warn that this alternative route will not only increase travel time but is also expected to incur higher costs. The additional expenses for crewing, fuel, and insurance are likely to be passed on to consumers.

 

Ajay Sahai, the Director-General of the Federation of Indian Export Organisations (FIEO), stated that there could be an overall 30-40% increase in freight costs.

The reduction in ship transits by these ocean carriers will negatively impact Egypt financially, given its role as the owner, operator, and maintainer of the Suez Canal.

Global Response

The U.S. government is engaged in discussions with the 39-member Combined Maritime Forces to establish a maritime task force aimed at "ensuring safe passage" for ships in the Red Sea.

Jake Sullivan, US National Security Adviser, has held Iran responsible for providing strong arms to the Houthi Militants.  He said, “While the Houthis are pulling the trigger, so to speak, they’re being handed the gun by Iran.”

In response to the attacks, the World Shipping Council (WSC) expressed deep alarm and concern about the escalating crisis. The WSC is calling for decisive action to protect seafarers, emphasizing, "The right of freedom of navigation stands as a fundamental right under international law and must be safeguarded. The time for resolute international engagement is now."