Following attacks by Yemeni rebels, several shipping firms have said they will avoid the key Red Sea shipping route, which is likely to disrupt global trade by increasing delays and increasing costs.
In recent weeks, Yemen’s Iran-backed Houthi rebels have launched numerous drone and missile attacks on ships passing through the Red Sea’s strategic Bab al-Mandab strait, a narrow passage at the southern tip of the Red Sea that they must navigate when travelling to or from the Suez Canal at the northern end.
The Houthis, who control much of Yemen but are not recognised internationally, said they were targeting vessels near the strait to pressure Israel over its devastating war with Palestinian Hamas militants in the Gaza Strip.
While Western warships in the area have shot down many drones and missiles, Huthi rebels said on Monday they had attacked two “Israeli-linked” vessels in the Red Sea, including a Norwegian-owned ship that denied any link to Israel.
Five of the world’s six top shipping companies have announced they will not send ships through the Red Sea — MSC, Maersk, CMA CGM, Hapag-Lloyd and Evergreen.
On Monday, Britain’s BP said it would suspend transit of oil through the Red Sea.
Cosco, the world’s fourth-largest shipping firm, has yet to announce its plans.
The Red Sea is a key route linking the Indian Ocean to the Mediterranean Sea.
Around 20,000 ships pass through the Suez Canal each year.
According to the International Chamber of Shipping, a London-based trade association for shipping firms, 12 percent of global trade passes through the Red Sea.
If ships don’t pass through the Red Sea and Suez Canal they need to travel around Africa, which adds considerable time and expense to journeys.
“It might be a six-day-longer journey for the average ship or vessel that will come from Asia going to Europe, and it might cost $300,000-400,000 extra in terms of fuel costs,” said Andreas Krieg, a professor at King’s College London.
Travelling around Africa could “cause a small increase in the price of goods”, said Paul Tourret, head of ISEMAR, a French maritime commerce institute.
The impact would be felt in several months’ time, he said.
The delay in shipping could also disrupt supply chains.
Egypt will suffer as well, as fees paid by ships using the Suez Canal are a key source of foreign currency earnings.
“Amid an ongoing currency crisis and high inflation, a drop in vital revenue from the Suez Canal would come at a bad time,” Torbjorn Soltvedt of risk intelligence firm Verisk Maplecroft told AFP.
Oil prices jumped nearly three percent on Monday following the latest attacks and the announcement by BP.