What to know about Red Sea attacks disrupting shipping
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Cargo ships at Israel's Haifa commercial shipping port in the Mediterranean Sea. Photo: Mati Milstein/NurPhoto via Getty Images
Global shipping giants are rerouting vessels away from the Red Sea as conflicts related to the Hamas-Israel war spread.
Driving the news: In response to the war, Yemen's Iran-backed Houthi rebels have been attacking merchant ships in the Red Sea before or after they move through the Suez Canal.
- Mediterranean Shipping Company — the world's largest container line — as well Maersk, Hapag-Lloyd, CMA CGM and Equinor have all announced similar decisions over the past several days.
- Energy major BP today followed suit.
Why it matters: Roughly 12% of global trade depends on the Suez Canal, which connects the Red and Mediterranean seas and serves as a shortcut for goods to move between Asia and Europe.
The impact: Ships that would previously have used the Suez will have to travel around Africa's southern tip, extending trips by about six to 14 days, Guy Platten, secretary-general of the trade group International Chamber of Shipping, tells Axios.
- And while it's too early to predict changes in shipping rates, Platten noted that there's already been an increase in insurance costs. Rates that are typically about 0.04% of a ship's value are now up to about 0.1% for shipowners.
- "[It's] quite a steep increase ... and all these things can have a knock-on effect clearly going forward," he says.
The big picture: The disruption, coupled with drought-induced congestion at the Panama Canal, is now threatening "to squelch a recovery in global trade and boost transportation costs just as inflation is cooling across the world," Bloomberg notes.
What we're watching: The attacks have added pressure for a U.S. military response.
- The Biden administration has sent messages to the Houthi rebels in Yemen via several channels recently, warning them to stop their attacks, Axios' Barak Ravid has reported.
- Monday afternoon, Defense Secretary Lloyd Austin announced the establishment of a revamped maritime task force that will escort ships in the Red Sea and deter Houthi attacks.
