Red Sea shipping costs rising after Houthis target more commercial vessels

As reported by Reuters, the cost of shipping goods through the Red Sea is increasing due to the escalating attacks by Yemen's Houthis on ships they believe are connected to Israel.

This raises concerns about potential disruptions to global supplies in the region. The Bab al-Mandab Strait, which connects the Red Sea and the Gulf of Aden, is particularly vulnerable to these attacks.

Duncan Potts, a former Royal Navy Vice Admiral, warns that these attacks could pose a global strategic economic threat as well as a regional geopolitical one. The London insurance market has already classified the southern Red Sea as a high-risk area, leading to higher war risk premiums for ships.

War risk premiums began rising the week of 11 December 2023, resulting in tens of thousands of dollars of additional costs for voyages of just seven days.

Some shipping companies have already chosen to reroute their ships via the Cape of Good Hope to avoid the Red Sea, which adds to journey times and costs.

The recent night attack by the Houthis shows a new capability and is seen as a direct threat to Israel's maritime trade. Talks are underway to establish a maritime task force to ensure the safe passage of ships in the Red Sea.

Kitack Lim, the secretary-general of the UN's shipping agency, emphasizes the need for member countries to work together to ensure unhindered and safe global navigation, stating that commercial shipping should never be “a collateral victim of geopolitical conflicts,” and member countries should work together to ensure “unhindered and safe global navigation.”

Source: Reuters