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Sunday (24 March) marked the 100-day anniversary from what many regard as the start of the Red Sea crisis for international trade.

In response to an attack on the vessel Maersk Gibraltar by Houthi rebels, Maersk announced it would not be transiting through the Red Sea and Suez Canal. Other shipping companies would follow suit over the subsequent weeks, culminating in ongoing disruption to the flow of international trade through one of the world’s major shipping chokepoints.

Other grim milestones include the first sinking of a vessel as a result of Houthi attacks, the Rubymar, and the first maritime casualties of the crisis, when two Filipino and one Vietnamese sailor were killed following an attack on True Confidence.

Additional maritime victims of the conflict include the crew of the hijacked Galaxy Leader vessel, who have still not been released from their illegal detention and whose whereabouts remains unknown.

Trade impact

100 days on from Maersk’s initial decision, the number of ships traversing the Suez Canal remains at historically low levels.

Marco Forgione, director general of the Institute of Export & International Trade (IOE&IT), said that disruption to international trade is still being felt:

“Ships have been rerouting, adding up to two weeks transit time and significant additional fuel costs, not to mention logistical headaches for supply chains to manage. Demand for rail and air freight has increased as businesses look for alternative ways to move their goods.”

Windward, a firm that uses AI to monitor the maritime ecosystem, said that attacks like those on the True Confidence and the Rubymar undermined sailors’ confidence.

“These incidents are likely to reduce crew willingness to transit the Red Sea and will impact the freight rates of this voyage, driving more traffic around The Cape of Good Hope. This route has less checkpoints than the Red Sea and could lead to an increase in deceptive shipping practices.”

Windard’s data found a “significant” drop of 37% in bulk carrier traffic between November 2023 and February 2024, with the latter being the lowest for two years.

The UN Conference on Trade and Development (UNCTAD), warned in its global trade update that the Red Sea crisis was threatening an otherwise “positive” outlook for 2024, as the crisis continued to drive up the costs and time of moving goods.

A new, ‘new normal’

WorldACD, a firm that tracks air cargo rates, said in its weekly update that Asia Pacific-Europe air routes were seeing some of the biggest growth, as China resumed activity after the Lunar New Year celebrations.

The Dutch-based firm also said that certain Asia-Europe sea-air hubs such as Dubai, Colombo and Bangkok have experienced “exceptionally high air cargo demand” to Europe since the start of this year, which it attributed primarily to the Red Sea disruption, with both rates (+8%) and tonnages (+15%) up in the last two weeks alone.

Head of research at Freightos, Judah Levine, said the shipping ecosystem was facing a “new normal”, with longer but predictable lead times, as carriers have activated previously idle vessels and shifted capacity to routes that needed it.

“That being said, ocean operations in some locations are still feeling a negative impact”, he said, adding that ocean shipping out of India was experiencing the worst of this, although he said that this was starting to improve.

“There are parts of the market that are still being impacted but overall we’re seeing a new stability and maybe entering a ‘new normal’.”

Drewry’s World Container Index decreased by 5% to US$3,010 per 40ft container, down from $3,964 in mid-to-late January at the height of the Suez Canal disruption.

Guardian and Aspides

At least two separate, multinational operations are ongoing to safeguard ships transiting through the Red Sea: Operation Prosperity Guardian, a 10-country coalition helmed by the UK and US navies, and Operation Aspides, launched by the EU last month.

Although both regularly highlight successful missions – EU authorities claim Operation Aspides has safeguarded at least 35 vessels since it was launched in February – many shippers remain cautious about rejoining the shipping route, with authorities still warning of the dangers for commercial shipping in the region.

The Indian navy also said it would step up its efforts, with Admiral R. Hari Kumar, chief of the naval staff and head of India’s navy, telling a press conference that: “As of yesterday (22 March), we had 11 submarines operating simultaneously in the sea, with more than 35 ships and over five aircraft deployed in different parts of the Indian Ocean Region”.

Dangers remain

An advisory from the US Maritime Administration, released a week ago (18 March), highlighted the myriad dangers still facing commercial vessels travelling through the Red Sea and the surrounding areas, including the Gulfs of Aden, Persia and Oman and the Indian Ocean.

These included hostile actions from Houthi rebels, but also boarding actions from Iranian forces and resurgent Somali pirates.

In an update, Maersk said it “welcomed” the EU’s operation, but added it would not be resuming transit, calling the risk “elevated”.

“We have seen attacks on commercial vessels increase in numbers, including the tragic attack on the vessel True Confidence, which resulted in the death of three crew members, and the sinking of the vessel Rubymar, which is posing a serious environmental risk.”

Hapag-Lloyd, ONE and MSC have all indicated they will not be resuming shipping through the region, while CMA said it would resuming shipping on a “case-by-case” basis in late February.

Sal Mercogliano, a maritime historian at Campbell University, said via his YouTube channel that the effectiveness of the safeguarding operations are limited given that they’re “not deterring the Houthi from their launches”.

“[As a] matter of fact, the most recent press out is that the Houthis now have more advanced missiles – hypersonics – that can reach even further.

“What that means is the ocean carriers who have to pay the war-risk insurance are not going to go through.”

Mercogliano, also a former merchant mariner, suggested that if national registries were to help with the insurance issue, “we may see some ships go through.”

A qualified immunity

Representatives of the Houthi group told Russia and China that their vessels would not be targeted. Bloomberg reported that this came about as a result of discussions between Russian and Chinese diplomats with Houthi political figure Mohammed Abdel Salam.

However, only days after the agreement was reported, US Central Command said that the vessel Huang Pu, a Panamanian flagged vessel, owned and operated by Chinese interests, came under attack from five missiles.

Further, many of the vessels that have been hit are often flagged, owned or operated by neutral nations. The vessel True Confidence reportedly flew a Barbadian flag, was operated by a Greek company and owned by a Liberian firm, yet still suffered the first merchant casualties of the conflict.

‘Weaponisation of trade’

Forgione said that “this weaponisation of trade routes will continue for some time”, as nations, politicians, military planners as well as business leaders “tangle with the Gordian knot of conflict”.

Josh Hutchinson, managing director of intelligence & risk at Ambrey, said that it was important to “reflect on those that have lost their lives during the conflict, and the other sailors who have been affected”.

He added:

“We have seen history repeat itself, with commercial shipping being targeted and used as a political tendon.

“The Houthis have publicly declared deals with Oman, Russia, and China, promising safety of passage, while saying they will now expand their targeting of vessels not just in the Red Sea and the Gulf of Aden, but also those in the Indian Ocean.”

Experts have warned of the reappearance of Somali pirates off the East African coastline as a result of the crisis.

‘Longer-term solutions needed’

Forgione says that “longer-term solutions” need to be implemented to minimise the disruption:

“First, the digitalisation of supply chains. Updating old paper-based systems helps logistics companies, port authorities and hauliers have greater visibility and reduce friction in the supply chain. Secondly, investing in the expansion of physical trade routes in other parts of the world will reduce the reliance on the route through the Red Sea.

“It is clear that all nations have to shift away from highly fragile supply chains and sourcing patterns to build resilient, anti-fragile systems. All of this will require time, significant resources and new approaches to manufacturing and inventory management.”

He says that even if the threat of Houthi attacks recedes, the issue is likely to re-occur in the future.

Hutchinson, a former Royal Marine, added:

“I believe that whilst the Houthis came to power by affiliating their activities with the war in Gaza, I think the prominent rise and control of the neighbouring oceans means the threat of the Houthis will be here for some time to come.”