Red Sea Security Threat to Shipping Update – Attacks Continue

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After the US and UK conducted air and missile strikes in Houthi-controlled areas of Yemen to end attacks on commercial ships, the Marshall Islands-flagged vessel ‘Gibraltar Eagle’ was struck by an anti-ship ballistic missile on January 15. No injuries or severe damage were reported, and the ship continued its journey. Another attack was launched the following day hitting the bulk carrier Zografia, with only minor damage reported.

The disruptions caused by the attacks continue to challenge the global supply chain, with carriers and shippers exploring alternative routing and transportation modes to mitigate the impacts. Additionally, the Federal Maritime Commission (FMC) has scheduled a public hearing on 7th February 2024 to investigate how the Red Sea disruptions impact commercial shipping.

So far, the Red Sea attacks have resulted in significant disruptions to the global supply chain, leading to a 68% decrease in vessel volume transiting through the Suez Canal and 264 vessels having been rerouted, causing severe delays in global shipping.

The ongoing rerouting through the Cape of Good Hope, coupled with disruptions at the Panama Canal, is driving growth in usage of the Asia to West Coast route. Voyages from Shanghai to New York now take 43 days, while to Los Angeles approximately 17 days. This trend is expected to continue into Q2-Q3 2024.

Alongside alternative routing, there is growing demand for alternative transportation modes, particularly Sea-Air services from Asia to the USA, UK, and EU. China to UK rail services are also seeing increasing interest. The aim of these hybrid transportation solutions is to mitigate disruptions and minimise transit times and costs.

Further repercussions of the Red Sea diversions include a significant surge in container demand, with shipping companies having placed orders for over 750,000 TEU ISO containers from China in the last two months. A sharp increase in war risk insurance premiums for ships sailing through the Red Sea, reaching 1% of the ship’s value, as well as an increase in demand for effective shipment insurance has also been the result.

The Federal Maritime Commission (FMC) has scheduled a public hearing on 7th February 2024 to investigate how the Red Sea disruptions impact commercial shipping and the global supply chain, aiming to gather information on the effects of attacks on commercial shipping and the steps taken in response.