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Harm ripples from Red Sea shipping attacks [1]

['Dave Reynolds']

Date: 2024-02-12 19:35:49+00:00

Remember when the news was all about the Ever Given? The massive container ship ran aground in the Suez Canal and blocked the vital Red Sea shipping corridor for six days. The resulting delays suffered by other ships transporting goods cost $9 billion per day.

Since November 2023, dozens of Houthi attacks on ships in the Red Sea and nearby Gulf of Aden have raised costs for businesses and consumers again. The Houthi attacks have forced transportation companies to reroute ships around the southern tip of Africa. (By late January, after two months of Houthi attacks, container ships transiting the Suez Canal fell by 67%.)

The significantly longer route delays deliveries of food, clothing, medicine and humanitarian aid. The longer route adds $1 million in fuel costs for a ship bound for northern Europe around the Cape of Good Hope, Reuters reports. Costs generally are passed along to the end users, or consumers. Lengthened shipping routes increase emissions too, which in turn can harm Earth’s climate.

“We often underestimate or completely ignore the impact of the maritime space on life on land,” said Ian Ralby, a U.S. author who advises governments and industry on maritime matters. “If shipping doesn’t flow, you [the consumer] don’t have the goods you’re used to buying from almost any store.” Or you pay more for them.

Suzuki Motor Corporation, Tesla Incorporated and Volvo Car AB temporarily closed plants or stalled manufacturing in Europe because they did not receive parts they needed in a timely fashion, the Associated Press reports. A U.S. producer of medical equipment, Man & Machine, has reported delays receiving parts from Asia.

Jan Hoffmann, head of logistics for the United Nations Conference on Trade and Development, faults Houthi attacks in the Red Sea for raising global food and energy prices at a time when Russia’s war against Ukraine has already cut grain exports from Europe and when lower water levels from drought are delaying shipping through the Panama Canal, another vital channel.

“Developing countries are particularly vulnerable to these disruptions,” Hoffman said of the cumulative pressures on global supply chains.

David Simchi-Levi, a logistics specialist at the Massachusetts Institute of Technology, says consumers may not see bare shelves from the recent disruptions, which he calls “short term.” That’s because companies strengthened supply chains after the Ever Given incident and retailers have stocked up in reaction to surging demand after the COVID-19 pandemic.

However, Ryan Petersen, of the supply chain management firm Flexport, told the Associated Press that, if sustained for a year, Houthi attacks on shipping could increase inflation of goods by up to 2% globally. “What’s happened right now is short-term chaos, and chaos leads to increased costs,” Peterson said in January.

While container ships carry goods that industry and consumers rely on, Ralby said, the effects of rerouting — like backlogs of ships waiting at ports — may take weeks to appear. “All kinds of different markets are being affected, but the extent of it isn’t really palpable yet,” he warned.

Recognizing the importance of navigational rights and freedoms, the U.N. Security Council adopted a resolution (2722) January 10 underscoring that the transit passage of merchant and commercial vessels through the Red Sea must continue unimpeded.

Shipping near the Red Sea also endured an uptick in piracy in late 2023 and early 2024, Ralby notes. The confluence of pressures that lead to rerouting, rising costs and delays will likely be felt most by those who have the least. “Humanitarian aid, food aid, medical supplies and water supplies destined for specific locations may not get there in time,” according to Ralby, who cites ongoing crises in Sudan, Ethiopia and Eritrea.

“If all the sudden, there is a two-week delay in things that are desperately needed, that’s tough for people,” he said.

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[1] Url: https://share.america.gov/harm-ripples-from-red-sea-shipping-attacks/?utm_source=homepage&utm_medium

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