The Red Sea crisis and trade: Daily updates

Mon 19 Feb 2024
Posted by: Phil Adnett
Trade News

Suez canal

Week commencing 19 February 

27 February, 11.25: Over half of UK exporters are being affected by the crisis in the Red Sea, according to a survey conducted by the British Chambers of Commerce (BCC).

In research reported by the BBC, the BCC found that firms face higher shipping costs and delays, sometimes as long as four weeks, while trading. The BCC warns that this could see upward pressure on UK inflation, and the organisation's head of trade policy, William Bain, said that the pressures "cannot be kept away from prices for long".

Some firms have cited a cost increase to shipping of 300%. Cashflows and supply chains are being affected, and firms as large as tea grand Tetley have warned of tight supply. Bain has called for support for firms in the upcoming Spring Budget.

22 February, 10.30: The head of the International Maritime Organization (IMO) has warned that piracy could once again be on the rise in response to the re-routing of ships around the Cape of Good Hope.

The FT reports that Arsenio Dominguez, IMO secretary-general, said that his organisation had spoken to African governments on both sides of the continent on the issue of piracy, but urged shipping companies to be vigilant on the issue.

Marcel Landau, Institute of Export & International Trade (IOE&IT) vice chair, told the New York Times that the crisis was already eating into the profits of his business, LSM Consumer & Office Products.

“Last year, it was wonderful. It was just like business ought to be,” he said. “And then it began to go wrong when the Middle East situation began to blow up.”

“We do feel like people are nervous,” IOE&IT member and director of Hogg Logistics, Lyndsay Hogg, told the paper. “We have seen a downturn in bookings.”

20 February, 11.30: Shippers around the world are facing problems with scheduling, port and capacity issues, according to a leading industry executive.

Jeremy Nixon, CEO of Japan’s Ocean Network Express, told the FT that many shippers were facing "scheduling issues", pointing to ports across the Mediterranean and Asia that he said were experiencing heavy pressure.

"Everybody is struggling with schedule integrity and therefore we’re getting berthing clashes in a number of ports."

The Rubymar, a ship that was abandoned by its crew yesterday after an attack by Houthi rebels, is reportedly at danger of sinking.

Houthi military spokesman Yahya Saree said that the vessel was "now at risk of potential sinking", according to Sky News.

19 February, 9.30: The UK Trade Maritime Observatory (UKTMO) has reported that a vessel was abandoned by its crew following an attack by Houthi rebels in the Red Sea yesterday (18 February). 

"The master reports an explosion in close proximity to the vessel resulting in damage," the UKTMO said in an update.

A later notification said that the crew had abandoned ship, with military escorts said to be active on the scene. The crew are reportedly unharmed.

The vessel was later identified as the Rubymar, a UK-registered, Belize-flagged cargo ship operated by a Lebanese company.

This is believed to be the first time that a vessel has suffered damage significant enough for it to be abandoned as a result of rebel attacks.

Week commencing 12 February 

15 February, 9.30: Shipping giant Maersk has said that it expects Red Sea disruptions to last until Q3 2024.

“Unfortunately, we don’t see any change in the Red Sea happening anytime soon,” Charles van der Steene, regional president for Maersk North America, told CNBC.

“We’re advising them the longer transit routes could last through Q2 and potentially Q3. Customers will need to make sure they have the longer overall transit time built into their supply chain.”

Star Bulk Carriers, a Greek shipper, has confirmed it will be joining the ever-growing list of companies avoiding the Red Sea passage.

“Going forward, we will not be passing the Suez Canal anymore because we are obviously a target of the Houthis being a public company registered in the US,” Petros Pappas, CEO of the company, told investors on a year-end results conference call.

Two of Star Bulk's ships, the Star Iris and the Star Nasia, have been the subject of attacks by Houthi rebels over the past two weeks.

The BBC reports that cruise operators Carnival Corporation has rerouted 12 of its ships away from the Red Sea, citing security concerns.

13 February, 10.30: The Red Sea crisis could threaten the UK's supply of raw tea, according to trade experts.

The Times reports that retail bosses have warned that there could be a "nationwide" shortage of black tea.

Marco Forgione, the director general of the Institute of Export & International Trade (IOE&IT), said:

“The UK is the world’s fifth largest tea importer and 10th largest exporter globally. The top two destinations where we source tea from are Kenya and India, which account for over 50% in total value of tea we import. Unprocessed tea is regularly being shipped into the UK so it can be packaged up and turned into the drink the nation loves.

Now we are seeing gaps on supermarket shelves, which I’m afraid to say may well be the first of many items caught up in this supply chain crisis. No amount of inventory management in the short term was able to deal with the immediate issues of that disruption and it will continue for many months, impacting other key sectors across the retail landscape.” 

The UKTMO has said another ship has been attacked in the Red Sea, with the master onboard reporting minor damage after two missiles struck the vessel.

The UKTMO did not identify the ship in question, US Central Command said that the ship was a Marshall Island-flagged ship headed to Bandar Iman Khomeini in Iran.

Week commencing 5 February 

9 February, 11:30: The Red Sea has reportedly forced a "re-think" of the Bank of England (BoE)'s plans for future interest rate cuts, according to a leading policymaker.

Catherine Mann, a member of the BoE's Monetary Policy Committee, warned that the supply chain disruption could exacerbate the UK's inflation issue, 

The BoE decision maker's comments come as Maersk CEO Vincent Clerc warned that the shipping giant was unsure over how long the disruption would last. 

"We have very little visibility as to whether this is a situation that will resolve in a matter of weeks or months, or whether this is something that is going to be with us for the full year," Clerc told CNBC.

He was making the comments as Maersk announced its 2023 earnings yesterday (8 February), which included comments that the wider shipping industry was facing a "difficult patch".

8 February, 11.30: Underwriters have warned of rising insurance costs for vessels passing through the Red Sea.

Ships with links to the UK, US and Israel are now playing 25-50% more in war risk premiums, according to Reuters. Industry sources said this could rise in the future.

Analysis by Lloyd’s List found that tanker transits through the Red Sea dropped by 20% week-on-week, while vessel transits fell by over 50%.

Update 6 February, 12:00: Houthi rebels claim to have launched their 50th attack on commercial shipping passing through the Red Sea.

According to the group, it launched attacks against the Star Nasia and the Morning Tide last night.

However, the UK Maritime Trade Operations (UKTMO) has only confirmed one of these attacks, saying that one unnamed vessel suffered "slight damage to the bridge windows" from an attack. The Houthi rebel group have previously supplied misleading information about its attacks on commercial shipping.

IOE&IT members can read an exclusive Trade Insights article on the Red Sea crisis here.

Update 5 February, 12:00A spokesman for the French carrier CMA has confirmed to Lloyd's List that the firm is pausing Red Sea transits, following speculation over the weekend.

This would make CMA the last major carrier to avoid making the journey via the route. Other large shipping companies, like Hapag-Lloyd and Maersk, are still re-routing ships away from the conflict zone. 

Week commencing 29 January 

Update 2 February, 11.00: The US navy has responded to yesterday's (see below) claims by the Houthis that the vessel Koi was damaged by rocket attacks.

In a press release, US Central Command said that two anti-ship cruise missiles were fired at the Koi but instead landed in the ocean, resulting in no damage.

Update 1 February, 10.30: Houthi rebels have claimed on X/Twitter that they have set the vessel Koi ablaze. Neither the UKTMO or US Central Command have reported any attacks, with the latter reporting that a Houthi drone unit and anti-ship cruise missile were both destroyed by US forces. Lloyd's List notes that the Houthi group has previously given inaccurate reports about attacks.

Appearing to take advantage of the chaos, pirate attacks around the Gulf of Aden are reportedly on the rise. The UKTMO reported two new approaches by armed groups off the coast of Somalia. The Indian navy also announced it had carried out two successful rescue operations of ships hijacked by Somali pirates.

Update 31 January, 11.30: Both the UK and EU have reportedly stepped up attempts to protect commercial shipping in the Red Sea.

"Not all member states will be willing to participate but no one will obstruct ... I hope that on the [17 February] the mission can be launched," EU foreign policy chief Josep Borrel told reporters ahead of a defence ministers meeting today.

He said that he hoped to be able to announce the formal creation of the EU's operation - named 'ASPIDES' - shortly after today's meeting. Spain is expected to take command of the task force.

Meanwhile, UK armed forces minister James Heappey has told PoliticsHome that a UK aircraft carrier could be sent to the Red Sea after the US carrier currently in the region, the USS Dwight D. Eisenhower, is sent home.

Update 30 January, 11.30: Late on Friday, the Marlin Luanda, a tanker owned by commodity trader Trafigura, was set on fire after being hit by a missile while transiting through the Red Sea. US Central Command reported that the attack, which it attributed to the Houthi-backed rebels, caused a “major fire” in one of the cargo holds. Parts of the French, US and Indian navies responded to the stricken vessel.

Trafigura later confirmed that all crew were safe and the fire had been extinguished. 

As the US considers its response to an attack on one of its military bases, trade experts are warning of the possible disruption caused by any escalation.

US president Joe Biden blamed Sunday’s (28 January) attack on Iranian-backed militants, although Tehran has reportedly distanced itself from the strike. White House National Security Council spokesperson John Kirkby said that Biden was “weighing” a decision on military action.

Institute of Export & International Trade (IOE&IT) director general, Marco Forgione, warned that any escalation could impact the world’s trading system:

“If reports from US are right, president Biden could take a decision soon which will impact nations and our global integrated trading system for the foreseeable future.”


Week commencing 22 January

Update 26 January, 11.30:  The UK Maritime Trade Operations (UKTMO) has reported that another vessel has come under attack. The master of an unnamed vessel reported that two missiles were launched at the ship, with no damage reported. Coalition forces are said to be responding.

Reuters reports that China has asked Iran to rein in the Houthis, following up on recent reports that US officials requested that Beijing put pressure on Tehran to control the rebel group.

Update 25 January, 10.30:  The US navy has reported that another ship, the Maersk Detroit, was targeted by three missiles fired by Houthi rebels. According to a press statement, one missile landed in the sea and the remaining two were shot down by the USS Gravely. 

The FT reports that Chinese liners are taking advantage of the crisis, as China's ships have a perceived immunity from attacks by the rebel group.  

Update 24 January, 10.30: US officials have urged China to step in and pressure Iran to "rein in" the Houthi rebel group.

The FT reports that the issue has been raised with Chinese diplomats on multiple occasions. Iran is widely regarded as backing the Houthis and is accused of supplying the rebel group with weapons.

S&P Global's flash UK Purchasing Managers' Index (PMI) for January showed private sector gains but indicated that the crisis in the Red Sea had hit manufacturers, pushing up transport costs and delivery times.

Cameron Bowie, managing director of Hapag-Lloyd, told the Telegraph that the delays could last months, even after the crisis had ended, and predicted a second wave of disruptions.

Update 23 January, 9.30:Both the UK and US launched another round of strikes against Houthi targets in Yemen yesterday. The Ministry of Defence claimed that the attacks hit eight targets, including missile systems, weapons storage facilities and other defence facilities. A statement added that this was part of the global coalition's attempts to protect freedom of navigation, the rules-based order and hold the Houthis "accountable" for their attacks on commercial shipping.

Foreign secretary David Cameron said that the UK wanted to send the "clearest possible message" that the coalition's words would be backed up by action. A spokesman for the Houthi rebel group stated that the attacks "would not go unanswered or unpunished".

Shipping executives told the FT that the supply chain line for cars was facing significant disruption as a result of the re-routing of vessels around the Cape of Good Hope, since most of the largest car-carriing ship operatros had switched to this route. Last week, Japanese operators NYK Line and K Line confirmed they would be avoiding the Suez Canal for their trips from Asia to Europe.

Update 22 January, 11.30: In an advisory notice, Maersk announced that its ME2 service will be routed around the Cape of Good Hope, with westbound calls to the ports of Salalah and Jeddah being paused "until further notice".

Maersk said that the ports of Algeciras and Tangiers will be used to mitigate disruption.

Although no injuries have yet been reported, sailors have told the BBC that they remain "worried" and "scared" about transit through the Red Sea.

The Sailors' Society, a welfare charity for seafarers and their families, has launched a crisis appeal to support the health and wellbeing of sailors travelling making the journey through the danger zone.

Maritime experts told the Independent that the current US and UK strategy of missile and air strikes were unlikely to stop Houthi operations. Observers have noted that the Houthis have experience of operating against opponents with air superiority and were unlikely to lose the will to fight any time soon.

Even US president Joe Biden acknowledged this while committing to his current strategy.

“Are they stopping the Houthis? No. Are they gonna continue? Yes,” he said.

On Saturday (20 January), US Central Command announced the destruction of another Houthi anti-ship missile.

Week commencing 15 January

Update 18 January, 9.30The UK Maritime Trade Operations (UKMTO) reported that a vessel was hit by an "unmanned aerial system" when passing through the Gulf of Aden. Genco Shipping & Trading, a US company, confirmed that the vessel was part of the company's fleet, adding that there were no crew injuries and the vessel suffered minimal damage before continuing on its journey.

The US Navy launched its fourth set of strikes against Houthi Rebel positions, according to a press statement. US Central Command said that 14 Houthi missiles were destroyed.

The US has officially designated the Houthi group has a Specially Designated Global Terrorist, which the White House says will restrict their ability to access financial support. Jake Sullivan, US national security advisor, said that if the group ceased its attacks, the US would "immediately re-evalaute this designation". The Yemeni rebel group responded by saying the decision would not affect its attacks.

Japanese carriers NYK and K Line have begun to divert their car-carrying ships via the Cape of Good Hope, while Russian carrier Sovcomflot is reportedly considering following suit.

Update 17 January, 10.30: UKMTO reported another attack on a vessel yesterday evening. The BBC reports that the Greek-owned Zografia was hit but has reported no damage.

The US navy has launched another set of strikes, with Reuters reporting that four anti-ship missiles were allegedly destroyed. US Central Command also said it seized a small boat carrying weapons to the rebel group.

Update 16 January, 10.30: The rising cost of maritime insurance is adding to the overall cost of international shipping and encouraging more vessels to be re-routed around the Cape of Good Hope.

According to Bloomberg, underwriters are now charging between 0.75% and 1% of a ship's value to ensure its passage through the Red Sea, a significant increase on the rate a few weeks ago.

Both the US Department of Transportation and shipping association BIMCO have recommended that vessels avoid the area. 

In an update to Parliament, prime minister Rishi Sunak said that the UK's strikes were "successful" and emphasised what he called the "limited, not escalatory" intent of the military action.

Update 15 January, 15.45UKMTO reports that a vessel in the Red Sea has been on the side by a missile. US Central Command has identified the vessel as the Gibraltar Eagle, a Marshall Islands-flagged ship. There are no reported casualties and the Eagle is carrying on her journey.

Update 14 January: Over the weekend, Houthi rebels launched fresh attacks on shipping vessels passing through the Red Sea, despite UK and US attempts to degrade their capabilities.

The UK Maritime Trade Operations (UKMTO) said that on Friday (12 January), a missile from Yemen came close to hitting a Russian-flagged vessel.

Yesterday, US Central Command said that an anti-ship cruise missile had been fired towards the USS Laboon. It was reportedly shot down with no casualties or damage sustained.

Still no relief

Houthi leadership have previously stated the rebel group will continue to attack shipping travelling through the Red Sea.

Sal Mercogliano, a maritime historian, said on twitter that “once again, military success against the Houthi does not equate to economic and commercial success as more ships divert around Africa,” noting that empty liquefied natural gas ships were still being diverted around the Cape of Good Hope.

‘Wait and see’

The military situation in the Red Sea continues to escalate, despite both the UK and US stressing that they are capable of further attacks.

The US carried out fresh strikes on Houthi sites in Yemen, while the UK remains cagey about whether another round of military action will be necessary.

Prime minister Rishi Sunak is scheduled to give a speech later today (15 January) in which he is expected to update Parliament on military action.

UK defence secretary Grant Shapps told Sky News that he would “consider” further action if it was needed, while foreign secretary Lord Cameron wrote in the Telegraph that the government would “always defend the freedom of navigation. And, crucially, we will be prepared to back words with actions.”


Warnings about the impact of the shipping disruptions on the global economy have begun to pick up pace.

Marco Forgione, director general of the Institute of Export & International Trade (IOE&IT), noted that the UK’s good economic news from Friday could be undermined by the harm caused to the world economy by the disruption in the Red Sea.

He said:

“The 0.3% GDP increase just announced for November is good news on the face of it. But with the Treasury estimating that the Red Sea disruption so far has knocked exactly that amount off GDP in recent weeks, those gains in November have effectively been wiped out already. And it could get worse.

“Analysts also estimate that global GDP has taken a 1.3% hit because of the disruption so far.”

Brent crude oil futures briefly rose to almost US$80 on Friday, subsequently dropping to around US$77, as traders reacted to the attacks on shipping and continued disruption.