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Most of the giant ships that carry about 12 percent of all world trade through the Suez Canal have changed course and are instead making the long journey around southern Africa.
Attacks on passing ships by Iran-aligned Houthi fighters in Yemen in response to Israel's war with Hamas in the Gaza Strip have choked off the only southern access to the planet's busiest shortcut.
Up to 12 of 14 container ships and a large proportion of oil and gas tankers are en route to the key route between the Mediterranean and the Red Sea – shortening the journey between Asian and European waters and between Asia and other parts of the country, according to Everstream Analytics, which tracks supply chains analysed, the Atlantic coasts are moving thousands of kilometers further south.
The detour could extend the transit time by up to a month and delay the delivery of goods and the docking of ships scheduled to continue sailing, including to the East Coast of the United States and from there back to Asia with new cargoes.
The route of the MOL Celebration, a large container ship, tells a story shared by many others. It appears to have changed direction as it approached the Red Sea, according to MarineTraffic, which provides real-time information on the movement of ships. On Friday it turned sharply and sailed southwest.
On Thursday it was just southeast of the Horn of Africa. Mirko Woitzik, global director of intelligence solutions at Everstream, said in an interview that the Houston-bound ship was almost certainly headed for the Suez Canal. The Japanese company ONE, which manages the ship, is among those that have rerouted ships due to the Houthi attacks. ONE did not respond to requests for comment, nor did the ship's technical manager and owner.
The ten largest container shipping lines in the world refuse to sail through the Red Sea. In recent weeks, Houthi fighters have fired rockets or hijacked ships at the sea's southern mouth, known as Bab el-Mandeb, or Gate of Tears.
The chaos at one of the world's busiest shipping chokepoints, an aftertaste of the Israel-Hamas war, threatens to upend international trade already under strain from rising inflation, disruptions from the war in Ukraine and the aftershocks of the coronavirus -Pandemic is on. A drought has disrupted traffic in the Panama Canal, another key passage in global trade, further complicating supply chains.
According to Woitzik, container shipping capacity through the Suez Canal fell sharply this week, from an already low 40 percent of full capacity on Monday to 12.7 percent on Wednesday.
Only smaller niche shipping companies continue to operate in the Red Sea, said Woitzik. The Houthis have said they are targeting Israel-linked ships, although shipping giants such as Denmark's Maersk and Taiwan's Evergreen have said they will avoid the area amid fears the attacks could be more indiscriminate.
Portal reported that Israel's Red Sea port in Eilat said on Thursday that Houthi attacks had reduced activity there by 85 percent.
Who are the Houthis and why are they attacking ships in the Red Sea?
As with the delay of a flight, the effects of rerouting ships cascade and cannot yet be fully estimated: crews' working hours are postponed, deliveries are delayed and the next voyage is also delayed.
A month might not sound like a long time for a slow-moving vessel, but since the cost of operating such a vessel averages $40,000 to $50,000 per day, “that's a huge increase in cost and time,” said Corey Ranslem, CEO of Dryad Global, a maritime intelligence company.
It will take weeks or perhaps months before it becomes clear how catastrophic the situation is, said Woitzik. Many ships have turned off signals to track them from a distance to ward off potential Houthi attackers, further obscuring the scale of the situation, he said.
Yemen's Houthi rebels are attacking ships in the Red Sea in what they say is revenge for Israel's attack on Gaza. It disrupts global trade. (Video: Joe Snell/The Washington Post)
“The longer this problem continues, the greater the economic impact will be,” Ranslem said. One immediate impact, he said, is that insurance premiums for vessels sailing in the region have increased “quite significantly.” According to Woitzik, tariffs for ships connected to Israel have increased by up to 250 percent, and some insurers are refusing to insure them entirely.
A committee of underwriters at Lloyd's, the London-based insurance market, has expanded coverage in the region it deems high-risk. The change was mainly to “reflect missile range,” Neil Roberts, head of marine and aviation at the Lloyd's Market Association, told Portal.
The United States has shot down Houthi missiles and drones, but that has not stopped the attacks. Washington announced this week the formation of a global military coalition called Operation Prosperity Guardian that would send warships to the region to escort tankers and other ships through the threatening waters. But the force of maritime bodyguards has done little to allay the fears of global shipping companies.
New US-led Red Sea task force will not stop ship attacks, Houthis say
The crisis has drawn comparisons to the 2021 grounding of the Ever Given, a Japanese container ship that got stuck in the Suez Canal, preventing ships from passing through. The incident led to traffic delays there for almost a week. Although the impact was ultimately not as severe as feared, the incident raised concerns and raised global awareness of the precariousness of relying so heavily on a narrow water channel.
The six-day blockage caused by the Ever Given forced a complete closure of the Suez Canal and continued to affect global trade for four to six weeks, while Houthi attacks have only partially restricted the flow. But the effects of the attacks could be far more lasting, said Woitzik.
A major flashpoint could come days after the Lunar New Year, February 10, 2024, when Chinese factories reopen after the holiday, triggering a sharp rise in Asian exports, Woitzik said. If the ships continue to be late, there could be more disorder.
Graphics by Samuel Granados. Cate Brown contributed to this report.