Following attacks in the Red Sea, Maersk and MSC re-route ships around Africa instead of using the Suez Canal. About 20 percent of global shipping has been disrupted.
Ship Head Around Africa to Avoid Red Sea Conflict Area
VOA reports MSC to Divert Shipping Away From Suez Canal After Red Sea Attacks
Swiss-based MSC Mediterranean Shipping Co, the world’s largest container shipping company, will stop using the Suez Canal after an attack on one of its ships, it said in a statement Saturday.
Yemen’s Iranian-backed Houthi movement has in recent weeks been attacking vessels in the Red Sea — a crucial route allowing East-West trade, especially oil, to use the Suez Canal to avoid the extra time and expense of circumnavigating Africa.
The Liberian-flagged MSC Palatium III was attacked on Friday with a drone in the Bab al-Mandab Strait at the southern end of the Red Sea, according to the Houthis.
No injuries were reported, but the vessel suffered some fire damage and was taken out of service, MSC said. Another Liberian-flagged vessel, the Al Jasrah, was hit by a missile, which also started a fire, the U.S. military said.
The Houthis have in recent weeks stepped up attacks on shipping and fired drones and missiles towards Israel — on Saturday hitting the Red Sea resort city of Eilat — in support of the Iranian-backed Palestinian Islamist Hamas group fighting Israel in Gaza.
Maersk Reroutes Vessels
Bloomberg reports Maersk Sails South of Africa to Avoid Red Sea Conflict Area
About 20 Maersk vessels, waiting on both sides of the Suez Canal, will now change course and sail the long way around the continent, the Copenhagen-based company said in a statement on Tuesday.
“Out of safety reasons all vessels previously paused and due to sail through the region will now be re-routed around Africa via the Cape of Good Hope,” Maersk said. “They will continue their voyages on the diverted routes as soon as operationally feasible.”
Pentagon Unveils Multinational Operation to Stop Chaos
Also consider Pentagon Unveils Multinational Operation
On Monday, the Pentagon said it was establishing a security operation to protect seaborne traffic from ballistic missiles and drone attacks launched by the Houthi groups in Yemen. The effort, called Operation Prosperity Guardian, will include the U.K., Bahrain, France, Norway and other countries.
“This is an international problem. And it deserves an international response,” U.S. Defense Secretary Lloyd Austin said in Tel Aviv on Monday.
U.S. officials tried to secure the support of Saudi Arabia and the United Arab Emirates, the two main players in the Yemeni civil war, people familiar with the discussions said. The two countries have opted to stay out for now as they are long at odds over how to deal with the Houthis, who get weapons and money from Iran.
Oil giant BP on Monday became the latest company to halt its tankers from sailing through the Red Sea. Several of the biggest boxship owners—A.P. Moller-Maersk, Hapag-Lloyd, MSC and CMA CGM—have also decided to divert some ships.
After BP’s withdrawal, traders and brokers said they were concerned that other major shipping and trading companies could follow suit. For the world economy, disruption to shipping in the Middle East would compound a slowdown in transit through the Panama Canal due to low water levels.
If the Red Sea becomes a no-go zone for most tankers, it would redraw the global oil market for the second time in two years after the war on Ukraine and related sanctions forced Russia to find new markets for its petroleum. That could send oil prices and tanker rates vaulting higher, said Richard Matthews, research director at E.A. Gibson Shipbrokers.
“All you know is it is going to cause chaos, and everything is going to get a lot more expensive,” he said.
20 Percent of Global Shipping Disrupted
The Wall Street Journal reports Red Sea Attacks Worry Shipping Companies, Even as U.S. Sends Warships
Hours after the U.S. announced a multinational task force to protect commercial traffic through the Red Sea, shipping giant A.P. Moller-Maersk said it would send its vessels around the Cape of Good Hope in southern Africa instead.
The message was clear: Jitters remain about a possible snarl to one of the world’s most crucial trade routes.
The sliver of water, separating the Mediterranean Sea and Indian Ocean, is bookended by the Suez Canal to the north and Bab el-Mandeb to the south. Those two straits, along with an Egyptian pipeline, carry about 12% of the world’s seaborne oil and 8% of its liquefied natural gas. More than 20% of the world’s container trade passes through Suez, according to shipbroker Clarksons.
Unlike during the Iran-Iraq war in the 1980s, when naval vessels escorted oil tankers through the region, the current volume of shipping traffic through the straits is way too high to make relying on protective convoys feasible, said Gene Moran, a retired U.S. Navy captain who commanded a destroyer and a cruiser. Moran predicted the U.S. would soon have to strike Houthi targets on land.
Red Sea Chaos Should Boost Tanker and Container Shipping Rates
FreightWaves reports Red Sea Chaos Should Boost Tanker and Container Shipping Rates
The number of shipping companies refusing to risk Red Sea transits is growing by the day. The waters off the Cape of Good Hope are about to get much busier as more ships circumvent Africa on a detour around the Red Sea and Suez Canal.
As of early Tuesday, companies confirmed or reported to be pausing Red Sea transits and/or rerouting around the Cape of Good Hope included container lines Maersk, MSC, Hapag-Lloyd, CMA CGM, Zim (NYSE: ZIM), Evergreen, Yang Ming, Cosco, OOCL, HMM and ONE; tanker owners Frontline (NYSE: FRO) and Euronav (NYSE: EURN); car carrier owner Wallenius Wilhelmsen; and oil and gas companies BP (NYSE: BP) and Equinor.
That list doesn’t capture the full effect, as ships controlled by other operators are also detouring. Argus reported that three liquefied natural gas (LNG) carriers and three very large gas carriers (VLGCs) diverted from the Red Sea route on Monday.
Ship diversions around the Cape significantly extend voyage distance, increasing shipping demand measured in ton-miles (volume multiplied by distance) and constraining transport capacity, a positive for rates.
The “dangerous dynamics” in the Red Sea highlight “how delicate global supply chains are” and how “prone to disruptions” they remain, said Mehrotra and Robertson.
How Long Will Cape Detours Persist?
Will ship operators feel comfortable enough to swiftly resume passages through the Bab-el-Mandeb as part of military-protected convoys? Or, will the new initiative lead to coalition strikes in Yemen that further escalate regional hostilities, making ship operators less likely to take a route through a war zone? And if military action does escalate, how long would it take for the Houthis’ attack capabilities to be destroyed?
“Convoys will take time to form and are not an ideal long-term solution, as vessels face added queueing time, slower sailing speeds and limited versatility,” said Omar Nokta, shipping analyst at Jefferies. “However, they are a much better alternative time-wise than sailing around Africa.”
Jet Fuel
Kpler analyzed the share of bulk seaborne commodity flows via the Suez Canal versus total trade, and jet fuel’s share was more than twice that of any other commodity.
“Jet fuel is the most exposed, at over 30%, as a result of the important trade flow from the Middle East and India to Europe,” said Kpler. “Should attacks escalate, the supply of jet fuel shipped to Europe will be affected first.”
US Direct Military Operations
If this does not quickly blow over, costs will soar, delays mount, and the US will be directly involved in the Yemen war.
Meanwhile, Saudi Arabia and the United Arab Emirates are sitting this one out.
In the last 5 days, crude is up over 7 percent. That should make all the oil producers happy.
Typical USA stupidity. You could have Israel cease-fire in Gaza, which is supported by 90%+ of the world’s population, and the Yemen problem goes away at once.
Or, spend Billion$ organizing a Coaliton of The Billing, send 50-60 warships there, probably get a few sunk, bomb Yemen to no avail, achieve nothing, then have to declare victory and move on, as usual.
Hmmm, which course of acton to take?
The funny part is that these idiot neo-cons, who now want to patrol The Red Sea and bomb Yemen and/or strike Iran, are using up the very weapons they would need to fight China over Taiwan, as the US MIC can’t replace those missiles that will be fired, for a decade or two. So maybe it is a great idea, if you want to avoid future wars.
The Coalition of the Useless will be all USA anyway, the other nations sending ships like UK and France, don’t have much AA defense on their ships, they will have to hide behind American ships anyway. Until the American ships run out of interceptor missiles ( in about a week) and have to withdraw to port to re-stock. For example Canada is sending 3 naval officers to help out, can’t find a ship that is battle ready (they don’t have any).
Neo-cons are always consistently stupid, they never learn from their past mistakes, as they are convinced they have never made any. From their point of view, they are correct, they made a lot of money losing all America’s wars, their bank accounts achieved decisive victory.
Mish wrote “In the last 5 days, crude is up over 7 percent. That should make all the oil producers happy.”
Not so. Those producers who can’t deliver their product to their usual customers because of Houthi attacks will lose revenue and won’t be happier. – The other producers will be somewhat happy, although seeing their customers go into recession will make them less happy.
Going around Cape Horn takes 10 more days and costs $1m to $2m dollars more for a big ship. There is enough shipping capacity in the world and current container shipping cost index is pretty low. So there is no real economic need to involve US Navy. On US Navy side it is an attempt to assert its globally dominant possition and on Yemeni/Iranian side it is a trap for the US Navy to overextend itself.
Exactly!
As far as precision targeting; you’re unlikely to see much better than this: Going around Africa adds a relatively enormous leg from Aden to Israel. Much, much less to Europe’s Atlantic ports. Italy, Greece and Turkey are major shipping destination collateral.
The Greeks and Turks, like Egypt, very possible have credible enough backchannels to the Houthis to feel less threatened. Meaning: If the say “No Israeli Connection”, the Houthis may at least tentatively believe them. The Sicilian contrabandistas….,fat chance! It’s not coincidental that Italy were the first to sign up for yet another ratcheting up of militarization of everything.
In the bigger scheme: East Asia to Europe is better off around Africa to begin with. Making the world dependent on being squeezable through a highly contested, narrow channel, is picture postcard failures of both the premature optimization and failure to properly hedge kind. Similar to designing the entire internet to be reliant on a single stretch of cable laid across Afghanistan.
Cape Horn is at the bottom of South America… Cape of Good Hope is what you mean.
Isn’t this special? Thanks again, bleeding heart Joe! Sheese.
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Revocation of the Terrorist Designations of Ansarallah
Press Statement
Antony J. Blinken, Secretary of State
February 12, 2021
Effective February 16, I am revoking the designations of Ansarallah, sometimes referred to as the Houthis, as a Foreign Terrorist Organization (FTO) under the Immigration and Nationality Act and as a Specially Designated Global Terrorist (SDGT) pursuant to Executive Order (E.O.) 13224, as amended.
This decision is a recognition of the dire humanitarian situation in Yemen. We have listened to warnings from the United Nations, humanitarian groups, and bipartisan members of Congress, among others, that the designations could have a devastating impact on Yemenis’ access to basic commodities like food and fuel. The revocations are intended to ensure that relevant U.S. policies do not impede assistance to those already suffering what has been called the world’s worst humanitarian crisis. By focusing on alleviating the humanitarian situation in Yemen, we hope the Yemeni parties can also focus on engaging in dialogue.
Ansarallah leaders Abdul Malik al-Houthi, Abd al-Khaliq Badr al-Din al-Houthi, and Abdullah Yahya al-Hakim remain sanctioned under E.O. 13611 related to acts that threaten the peace, security, or stability of Yemen. We will continue to closely monitor the activities of Ansarallah and its leaders and are actively identifying additional targets for designation, especially those responsible for explosive boat attacks against commercial shipping in the Red Sea and UAV and missile attacks into Saudi Arabia. The United States will also continue to support the implementation of UN sanctions imposed on members of Ansarallah and will continue to call attention to the group’s destabilizing activity and pressure the group to change its behavior.
The United States remains clear-eyed about Ansarallah’s malign actions, and aggression, including taking control of large areas of Yemen by force, attacking U.S. partners in the Gulf, kidnapping and torturing citizens of the United States and many of our allies, diverting humanitarian aid, brutally repressing Yemenis in areas they control, and the deadly attack on December 30, 2020 in Aden against the cabinet of the legitimate government of Yemen. Ansarallah’s actions and intransigence prolong this conflict and exact serious humanitarian costs.
We remain committed to helping U.S. partners in the Gulf defend themselves, including against threats arising from Yemen, many of which are carried out with the support of Iran. The United States will redouble its efforts, alongside the United Nations and others, to end the war itself. We reaffirm our strong belief that there is no military solution to this conflict.
We urge all parties to work towards a lasting political solution, which is the only means to durably end the humanitarian crisis afflicting the people of Yemen.
link to state.gov
2024 has disaster written all over it. I posted at the start of the decade there would be a nuclear war in the middle east. We are almost there now. Hear me then, understand me now and believe me later.
I predicted everything before I was even born – beat that.
I read this after disgust hearing other news about the topic. The other news claimed that shipping stocks will go up, because the forced reroute means higher charges for shipping which means (?) higher profits. I do not follow the logic.
A forced reroute means higher costs. Shippers will charge higher prices for that. That does <b>not</b> mean higher revenues, since volume can easily be lower, and it doesn’t mean higher profits once the higher costs are subtracted from the revenue that is received.
If Iran wants to get into the game, the Persian Gulf can be closed as easily as the Red Sea. Maybe someone–say a distressed Israel, when it’s had enough of the West’s duplicity–will shut down Bandar Abbas.
Don’t worry, oil at $150-$300 a barrel is good for the economy. $10/gallon for gas or more, you’ll get used to it, just get a team of horses to pull your SUV.
The difference between a few years ago and now is that, before, the rest of the Middle East oil producers would have stood agains Iran if they blocked the Straits of Hormuz, but today, thanks to Israel, they would support that course of action.
Got oil? US should have spent less on carrier groups and more on destroyers to protect the shipping lanes and have China pony up some of the cash to cover the cost.
Nope… the US is part of a team, and has its specialities, such as carrier groups; the Royal Navy does destroyers better.
Why does China have to pony up? Nobody in the Middle East is going to stop selling oil to China, it’s the West who support Israel they will blockade. Tankers bound for China will sail right through the blockade undisturbed.
Prediction: A nuclear missile goes off somewhere in North Africa.
Biden will send over that girly-man admiral and he/she/it will beat back Houthi by swinging its purse like it’s Thor’s hammer
I see a grand bargain in the making: Russia will not supply the Houthis will naval and aerial drones in exchange for Ukraine not getting NATO drones.
Who would have thought that the opportunity for an equitable bargain will come about so soon.
Those cunning politicians, Biden and Obama. Years courting the enemies of EEUU like Iran, while deprecating old time allies like Israel and Arabia Saudi.
¿They didn’t look at a map in their entire life?
More oil used for longer shipping routes. Short term backup in oil, LNG and refined products deliveries. Perhaps the US will also stop turning a blind eye to Iranian exports. Lots of impacts, though it’s hard to predict how serious this might become. Certainly worth watching.
How easy would it be for oil to be trucked across Saudi Arabia and then loaded into tankers on its west coast? Technically its feasible, but what about the costs? I do not recommend a pipeline because it is a single point of failure, and vulnerable to missile attack. This would bypass Yemen.
More rambling. Is Saudi Arabia really being neutral when it benefits from higher oil prices?
Yeah, just build a pipeline from Oman to Kenya, then up through SouthSudan, across the CAR to Cameroon, and Bob’s your uncle.
…or maybe a canal from Djibouti, through Ethopia and Uganda to the river Congo?
Iran is sending missile boats to face NATO’s and the Israeli navies. The Dow reached : 1929 high to 2000 high today.
I remember the news media in 2016 telling me Trump was going to start WW3. Turns out the warmongers found a more reliable partner with Biden.
Biden has never seen a war he didn’t like, war on drugs, war on terror, permanent all the time war.
What are these US ships going to do exactly? Bomb the cigarette factory where the drones were launched from? Sounds like it. Just start bombing stuff in every port, harbor town and let the DEI deity sort them out.
Cargo submarines… it’s so obvious really.
Last check only 2.5% of the total ships that typically transit through the Suez Canal have rerouted. But the ships that continue to use the Red Sea will see increase costs.
The Joint War Committee has expanded the high-risk zone in the Red Sea, influencing insurance premiums. The premiums have soared from about 0.07% of the ship’s value in early December to a staggering 0.5% to 0.7%. The current situation kinda mirrors the Iran-Iraq war era when war risk insurance peaked at about 5%. If the Red Sea conflict continues to escalate, there’s a fear that insurance rates might reach or even surpass these historical highs.
They can always go east across the pacific to the Panama canal.
Alistair Crooke, who is a retired British diplomat, has an interesting article out about Hamas and how it’s new emphasis dovetails with the movement towards a multipolar world.
link to unz.com
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I don’t think the Suez traffic is enough to create a major disruption. However, it does impact Egypt, which gets revenue from ships passing through the canal. Egypt has many economic problems and this just further exacerbates them. They are upset with the Houthis.
As for the US, We ARE already directly involved in Yemen war.
And the cost differential to shoot down Houthis drones with expensive missiles is severe. What happened to those Laser weapons that have been deployed on Navy ships over the past couple of years? Weren’t they supposed to be a cheap weapon to use against drones?
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A $2M missile vs. a $2,000 drone: Pentagon worried over cost of Houthi attacks
“That quickly becomes a problem because the most benefit … is in their favor,” one expert said.
By Lara Seligman and Matt Berg
12/19/2023 02:00 PM EST
As American warships rack up kills against Houthi drones and missiles in the Red Sea, Pentagon officials are increasingly alarmed not just at the threat to U.S. naval forces and international shipping — but at the growing cost of keeping them safe.
U.S. Navy destroyers have shot down 38 drones and multiple missiles in the Red Sea over the past two months, according to a Defense Department official, as the Iran-backed militants have stepped up attacks on commercial vessels moving energy and oil through the world’s most vital shipping lanes. On Saturday alone, the destroyer USS Carney intercepted 14 one-way attack drones.
Houthi leaders have said the attacks are a show of support for the Palestinians, and that they won’t stop until Israel halts its operations in Gaza. Defense Secretary Lloyd Austin on Monday announced a new international maritime coalition to safeguard shipping and counter the attacks.
…
link to politico.com
ECM shot down Yemen’s drones. Their missiles were shot by anti missile missiles. The Houthies attacked commercial ships, bc they failed to penetrate the Israeli’s air defense, but yesterday Hezbollah destroyed two Iron Dome batteries.
Container ships are huge. The Houthies have to hit the engine room to cause a serious
damage. Container ships are built strong to sustain high waves and hurricanes. It’s
easier to sink a frigate or a battle ship than a container ship.Tankers are a different story.
You know, this almost sounds like a job for WWII light carrier and a dozen Hellcats.
Or for that mater, was it the Spitfire that the British used to tip over V-1 buzz bombs? How fast are these drones?
Or you could put some giant mirrors on floating barges to reflect the sun’s rays back at the coast, and fire chaff to confuse the radar.
I think Suez is 30% of Egypt’s economy, and aside from Rafah, Egypts hosts millions of refugees… all held back from Europe by the mighty Egyptian military… it’s time to point the money hose away from the Black Sea, to the Red Sea, and spin the watery roulette wheel.
“If this does not quickly blow over, costs will soar, delays mount, and the US will be directly involved in the Yemen war.”
Well, heck, we should have just helped Hamas torture, rape, and murder every single Israeli – then we’d still have cheap shipping!
or maybe the US of A should NOT have supported djews occupying(conquering) more and more palestinan territory for decades …..Mind you I do not ‘love’ Palestinians, however the more I learn about fanatic djews, the more I think Hitler should ve done a better job !
Or, we could have resisted trying to be the policeman for the world.
Yiiiiiiiiiiiiiiiihaaaaaaaaaaaaaa…. that’s what the US of A is good at ! Ain t it ?