The Mediterranean Shipping Company (MSC), the world’s largest shipping group, has taken decisive action in response to the escalating threat of attacks in the Red Sea. Joining MSC in this strategic shift are French shipping giant CMA CGM, Danish leader Maersk, and German transport behemoth Hapag-Lloyd, all responding to the increased risks posed by Iran-backed Houthi rebels in Yemen.
The Rising Threat
The Houthis, known for their hostility towards Israel, have intensified their attacks on shipping routes, particularly targeting vessels traveling to Israel. This surge in aggression follows the Israeli military campaign in Gaza, triggered by the Hamas attacks on 7 October. The conflict has led to significant casualties and has further heightened tensions in the region.
Impact on the Red Sea Route
The Red Sea, a pivotal route for global oil and fuel shipments, is now a hotspot of instability. Houthi rebels have escalated their offensive, employing drones and rockets against foreign-owned vessels, and even extending their reach towards Israel, prompting a defensive response from the US guided-missile destroyers in the region.
MSC’s Response
In light of these developments, MSC has announced the diversion of its ships, citing the “serious” nature of the situation. The attack on MSC PALATIUM III, which resulted in no crew injuries but took the ship out of service, exemplifies the dangers in the area. MSC’s vessels are now rerouting via the Cape of Good Hope, at Africa’s southern tip.
CMA CGM and Maersk’s Measures
Echoing MSC’s concerns, CMA CGM, the third-largest shipping company globally, has ordered its container ships to pause their journey in safe waters. Maersk, the second-biggest firm, has described the situation as “alarming,” instructing its vessels to avoid the Bab al-Mandab Strait and pause their journeys.
Economic Ramifications
This collective decision by four of the top five shipping companies in the world has far-reaching economic implications. According to Sue Terpilowski from the Chartered Institute of Logistics and Transport, the industry faces soaring insurance premiums, crewing, and fuel costs. These expenses, coupled with the longer routes, are likely to affect global supply chains and consumer prices.
The Importance of Bab al-Mandab Strait
The Bab al-Mandab Strait, also known as the Gate of Tears, is a narrow 20-mile channel between Yemen and the African coast, crucial for access to the Suez Canal. The strait’s strategic importance is underscored by the fact that about 17,000 ships and 10% of global trade pass through it annually. Avoiding this route necessitates significantly longer journeys, highlighting the strait’s role as a linchpin in global trade.
What this means for John Mason International customers?
In light of the recent events, many vessels, including those waiting to transit the Suez Canal, have been put on temporary hold. We have received notifications that carriers are beginning to reroute cargo around Africa to ensure safety and compliance. We kindly request your understanding and patience as we navigate through these challenges. Please be prepared for inevitable delays, increased transit times, and potential schedule changes that may arise due to these extraordinary circumstances. Rest assured, we are committed to keeping you informed and minimizing the impact on your shipments as much as possible.
