The increased instability in the Red Sea is having significant global consequences, affecting shipping routes and the international economy. The region’s tensions have escalated disruptions in one of the world’s most critical maritime corridors.
The Houthi group in Yemen has announced that they will continue to prevent Israeli ships or those heading to Israel from sailing in the Red Sea and Arabian Sea until aid, including food and medicine, is allowed into the Gaza Strip. The group has utilized drones and missiles against vessels navigating the strategic Bab el-Mandeb Strait, a 20-mile-wide passage that separates Eritrea and Djibouti on the African side from Yemen on the Arabian Peninsula.
This situation is significant because approximately 15 percent of global shipping and 30 percent of container traffic, including oil tankers and cargo ships, transit through the Red Sea annually. The route handles about 8 percent of all grain shipments, 12 percent of oil, and 8 percent of liquefied natural gas worldwide.
In response to the increased risks, many logistics companies are rerouting ships around the Cape of Good Hope in South Africa. This alternative route is approximately 3,500 nautical miles longer, adding between seven to eighteen days to voyages. Such detours are complicating the global shipping system and increasing operational costs.
According to the International Maritime Organization, several leading shipping companies have decided to avoid the Red Sea corridor. The rates for transporting goods by sea have surged, returning to levels seen during the COVID-19 pandemic. The Drewry World Container Index reported that the price of a 40-foot container reached $3,072 on January 11. Likewise, the Shanghai Container Freight Index, which tracks shipping rates for imports from China, has risen by 161 percent since December 15, increasing from $1,029 to $2,694.
Data from the maritime monitoring platform PortWatch indicates that the number of ships crossing the Bab el-Mandeb Strait has fallen by 45 percent compared to the previous year, while transit through the Suez Canal has decreased by 28 percent. In contrast, traffic around the Cape of Good Hope has increased by 63 percent during the same period.
The shift in shipping patterns is exerting pressure on global supply chains, leading to increased costs for goods and potential delays in deliveries. Economies worldwide are feeling the effects as transportation expenses rise and the availability of commodities like oil, gas, and grains is affected.
Experts warn that prolonged disruptions in the Red Sea corridor could have lasting impacts on international trade and economic stability. Stakeholders are closely monitoring the situation, hoping for a resolution that will restore safe passage through this vital maritime route.
Reference(s):
cgtn.com
