All data are based on the daily closing price as of May 24, 2024

Global Shipping Operators Reroute Vessels from Red Sea Amid Houthi Attacks

Increased Maritime Threats Prompt Major Shippers to Avoid Red Sea, Opting for Longer Cape of Good Hope Route
m 9104.TSE k 9107.TSE n 9101.TSE Blue Chip 150 Mid and Small Cap 2000
Share this on

In response to escalating attacks by Houthi rebels based in Yemen, major global shipping operators, including Ocean Network Express (ONE), are rerouting their vessels away from the Red Sea. This strategic shift, announced Tuesday by the Japanese company, aims to ensure the safety of commercial shipping amidst rising regional tensions.

ONE, a collaboration between prominent Japanese shippers K Line, Mitsui O.S.K. Lines, and Nippon Yusen (NYK Line), joins other major shipping companies in altering their routes. AP Moller-Maersk, Hapag-Lloyd, and MSC have also suspended passage through key maritime zones in the Red Sea, including the Bab al-Mandab strait, a crucial chokepoint near Yemen and Djibouti.

This realignment comes after Houthi militants, supported by Iran, threatened and executed drone attacks on vessels, particularly those connected to Israel, following the Israel-Hamas war that began in October. Reuters reported drone attacks against two commercial vessels off the Yemeni coast on Monday.

The Suez Canal Authority in Egypt noted a significant shift in maritime traffic, with 55 ships opting for the alternative Cape of Good Hope route since November 19, avoiding the traditionally shorter passage through the Suez Canal. The British Defence Ministry and the U.S. Central Command have reported engaging and neutralizing Houthi drones in the region, underscoring the heightened security risks.

The redirection of these vessels around the southern tip of Africa significantly extends transit times by 10 to 20 days and increases fuel costs. This rerouting could have broader implications, particularly for crude oil and liquefied natural gas shipments, potentially exerting upward pressure on global energy prices.

Adding to the complexities, the Panama Canal is facing restrictions due to historically low water levels, further straining global supply chains. In light of these disruptions, U.S. Defense Secretary Lloyd Austin announced the formation of a multinational operation to safeguard ships in the Red Sea, with participation from at least 10 countries, including the U.K. and France.

This collective move by global shippers reflects a cautious approach to ensure maritime safety and the uninterrupted flow of global trade amidst evolving geopolitical and environmental challenges.

Share this on
Jakota Newsletter

Stay ahead in the JAKOTA stock markets with our roundup of vital insights

Icon scroll to top