Recent research highlights a stark divide in how global shipping reacts to escalating Houthi attacks in the Red Sea. Specifically, containerised trade has seen a significant decline as major liners reroute. However, commodity flows, particularly oil and gas, remain steady.
January 9 marked the 26th attack on commercial shipping lines since November. During this event, rebels used missiles to stage a complex attack on dozens of merchant vessels. Although the incident was the largest assault since the start of the conflict, US and UK military forces shot down the missiles. Consequently, the statement reported no damage or injuries.
The Container Shipping Exodus
Container ships act as the primary targets and remain the first to flee the region. Since mid-December, transits for this vessel type have plummeted. Specifically, the count of container ships in the area declined significantly after December 16. This followed an event where US and UK forces shot down several attack drones.
- Rerouting Costs: Most major container lines now divert vessels around Africa’s Cape of Good Hope. This detour adds approximately 3,500 nautical miles to the journey.
- Fuel and Freight Spikes: Rerouting costs up to $1 million in extra fuel per round trip. Therefore, freight rates from North Asia to northern Europe rose from $1,800 to $4,500 per 40-foot unit in late December.
- Targeting Logic: Research suggests rebels target container ships more frequently because they carry consumer goods. Disrupting these vessels affects the UK and European markets more than attacking energy tankers.
Resilience in Energy and Bulk Commodities
In contrast to the container sector, the flow of oil, gas, and bulk commodities remains remarkably steady. Research from maritime firm MariTrace indicates that most tankers and bulk carriers continue to use the Red Sea.
| Vessel Type | December Traffic Trend | Current Status |
| Container Ships | Declining significantly (down 25% year-on-year) | Rerouting around Cape |
| Oil & Gas Tankers | Steady (average 76 per day) | Continuing through Red Sea |
| Bulk Carriers | Steady | Continuing through Red Sea |
| General Dry Cargo | Steady | Continuing through Red Sea |
While oil giants like BP and Equinor announced precautionary pauses in December, the broader tanker market has not followed suit. For many operators, the cost of the 10-day detour outweighs the current hike in insurance premiums. Furthermore, US petroleum exports rose 30% in late December. This suggests that some European customers may buy US barrels to avoid Middle Eastern transit risks.
Economic Impacts and Global Inflation
The disparity in vessel reactions creates a disruption in the global economy. Specifically, the delay in container shipments impacts supply chains for clothing and food.
- Consumer Goods: The delay in container shipments directly impacts the availability of consumer goods. Specifically, this delay can elevate food prices and lead to shortages in retail sectors.
- Insurance Surcharges: War risk premiums for the Red Sea have shot up. For cargo vessels, these costs often pass to the consumer. Consequently, this further stokes inflation in the UK and Europe.
- Freight Rates: Although rates hit their highest point since October 2022, they remain well below the pandemic-related peaks of late 2021.
Ultimately, Houthi officials state that attacks will not stop until the siege of Gaza is lifted. While the US and UK warn of consequences, the maritime industry must navigate a period of intense volatility. Therefore, concrete steps to secure these vital trade routes remain a top priority for global trade organizations.
Courtesy: gtreview.com
