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Analysis: Maritime Trade in the Red Sea is completely disrupted

Posted on March 11, 2024

The first deadly attack on a commercial ship in the Red Sea since Yemen’s Iran-backed Houthis began targeting ships late last year in support of Palestinians in Gaza, which Israel is bombing, laid bare the enormous challenge of restoring safe passage along one of the world’s most important trade routes.

At least three crew members were killed and four others injured in Wednesday’s attack on the Liberian-owned M/V True Confidence, one of the vessels carrying dry cargo such as grain and iron ore.

The deadly attack marks a significant escalation in Houthi attacks on ships in the Red Sea and comes despite a United States (U.S.)-led naval coalition to protect the key waterway. Also, it all comes after an attack late last month that sank a cargo ship, which is now leaking oil into the ocean.

Fewer ships appear to be passing through the Red Sea and the neighboring Suez Canal after the latest attack, according to maritime risk analysis firm Windward. Transit has already dropped significantly since December when carriers began avoiding the area and diverting ships around the southern tip of Africa.

Windward said the number of bulk carriers anchoring outside ports north and south of the Suez Canal rose by 225 percent on Wednesday compared to the previous day. “Our data shows that 61% of them (anchored) after 13:30 UTC (18:30 ET), which was the time of the attack,” Windward CEO Ami Daniel told CNN.

He expects the attack to cause even more bulk carriers to avoid the Channel, which carries 10-15% of world trade and 30% of container trade. “The propensity for something to happen is greater than people thought, and the severity of the impact, when something does happen, is (worse) than people thought,” he added.

Data show that last month the number of bulk carriers in the Red Sea was already at its lowest level in two years.

According to Peter Sand, chief analyst at Xeneta (a ship analysis company based in Norway), only 30% of the usual shipping capacity – including container ships, bulk carriers, road carriers and tankers carrying oil and liquid natural gas – still passes through the Red Sea and the Suez Canal.

Sailors on the ‘front line’

At the very least, the attack makes it clear that it could be many months before the crisis is resolved.

This means that major container shipping companies – including Maersk, MSC and Hapag Lloyd – will continue to send their vessels on the much longer, more expensive route around Africa, keeping the costs of transporting goods high, N1 writes.



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