Shipping giants pause route as attacks intensify

Rising tensions: The Galaxy Leader commercial ship, seized by the Houthis last month, is seen off the coast of Yemen. The group is now mounting drone and missile attacks against ships on the vital trade route. — Reuters.

Washington: Spiralling attacks on merchant ships by Houthi militants off the coast of Yemen have prompted widespread trade disruption with some of the world’s biggest vessel owners evaluating whether it’s safe to send crews through the Red Sea.

Two of the world’s largest container shipping lines said last Friday that they were pausing transits through the Red Sea after their vessels were attacked.

Two oil tanker companies have now said they are insisting on a clause in charters that will allow them to send their ships around Africa if they deem the waters off Yemen unsafe.

The moves will increase pressure on the United States and its allies to improve security along one of the world’s most important trade corridors to avoid undermining the global economic recovery.

An international trade group called for more military support to end the attacks.

The United States “will continue to consider options and take coordinated, multilateral action to confront these unacceptable threats and attacks in the Red Sea”, said White House National Security Council spokesman Eduardo Maia Silva.

Houthi militants have been attacking more and more merchant ships in the Red Sea – especially vessels that they claim are connected to Israel – in response to the war in Gaza.

A.P. Moller-Maersk A/S, the world’s second-largest owner of container ships, said in a statement last Friday that it has instructed its vessels heading for the southern entrance of the Red Sea to pause their voyages. Its vessel Maersk Gibraltar was attacked.

Shortly after Maersk’s announcement, Germany’s Hapag-Lloyd AG announced a halt, “then will decide for the period after”.

“Following the near-miss incident involving Maersk Gibraltar and yet another attack on a container vessel, we have instructed all Maersk vessels in the area bound to pass through the Bab al-Mandab Strait to pause their journey until further notice,” Maersk said.

Bab al-Mandab is a narrow stretch of water that links the Indian Ocean to the Red Sea. Any ship using the Suez Canal as a shortcut between Asia and Europe must go through it.

Maersk said its number one priority was the safety of its crews, highlighting the challenge of balancing its customers’ needs against the duty to look after the staff.

Sailing the long way around Africa would add thousands of miles to trade routes, boost fuel bills and delay cargo deliveries.

Euronav NV, an owner of oil supertankers, said it was insisting that its vessels be granted an option in all charters to avoid the Red Sea. Last Thursday, Maersk Tankers said the same thing after one of its vessels was attacked.

While it’s unclear how long-lasting Maersk and Hapag-Lloyd’s pauses will ultimately be, such steps underscore how serious and potentially economically damaging the attacks could be.

Maersk owns a fleet of over 300 ships. Hapag-Lloyd ranks eighth, according to data from Clarkson Research Services Ltd.

About 12% of global trade depends on the Suez Canal and 5% on the Panama Canal, according to Marco Forgione, director general at the Institute of Export & International Trade. Panama is disrupted by drought.

“They are fundamental to the flow of international trade,” he said. “Without them operating smoothly, the domino effect of damage and disruption to supply chains caused by ships delayed and in the wrong places will be substantial.”

The Houthi attacks appear to have escalated in the past several days with individual ships’ connections to Israel becoming less obvious.

That suggests risks are widening for the industry at large, with insurance costs climbing. At least three container ships have been attacked or disrupted near Yemen in the past few days or so.

Maersk’s decision in particular will add new urgency to a US push – in the works for weeks – to form a maritime task force that will protect ships travelling through the Red Sea from Houthi attacks.

White House and Pentagon officials have said the Biden administration is working with partners to form that group, with an announcement expected any day.

The Biden administration will work to strengthen and expand the maritime force, pursue “targeted efforts” at the United Nations, review potential terrorist designations for the Houthis and work with allies, Silva said. — Bloomberg