Shippers avoiding Red Sea transits after attacks, watching Suez Canal traffic

8:37 17.12.2023 •

Suez Canal
Photo: Reuters

Shippers are diverting from Middle East transit routes in response to a growing number of drone attacks in the Red Sea and Gulf of Aden, shippers and industry have warned, informs SPGlobal.

Risks to shipping in the Red Sea and Bab al-Mandeb area – through which about 10% of global seaborne oil flows – ratcheted up in the wake of the Israel-Hamas war after Iranian-backed Houthis in Yemen expressed their support for the Palestinians. From a car carrier to tankers to dry bulkers, an entire range of commercial ships has come under attack by Houthis, prompting navies and coast guards to issue advisories on the heightened need for security. This has led to a rise in tanker rates in the area, alongside "insurance rates" , David Loosley, secretary general of shipping industry group Bimco, said, adding that "but the bigger impact is rerouting."

Another step being taken to ensure the safety of the crew is putting more people on the lookout in case of an attack by helicopters, as was the case in one of the incidents. "There aren't many people aboard these ships. And if you think of the size of the ship, there is a very large landing area," Loosley said. "You'd expect the crew to be looking forward, looking for other ships. They don't want to hit ships."

On Dec. 9, the Houthis threatened to attack ships transporting commodities to Israeli ports regardless of nationality, expanding their target list to cover non-Israeli vessels. The vessels targeted in recent weeks have current, or past Israeli ownership, or are operated by Israeli linked companies.

UK authorities reported Dec. 3 multiple threats to shipping transiting the Bab el-Mandeb Strait at the entrance to the Red Sea, S&P Global Commodity insights reported earlier.

Shippers, meanwhile, are also watching for any evidence of more congestion in the Suez Canal, from where 19,000 vessels transit each year.

Whether the attacks affect the Suez Canal "will be a concern for everyone," Captain Rajalingam Subramaniam, president and CEO of Malaysia's MISC Group, said in an interview at the shipping forum on Dec. 10. "To the best of our knowledge it has not been affected. The congestion should not be the primary concern. Our primary concern is the safety and security of our people. The right to innocent passage should be the priority and that should be protected by everyone."

MISC Group's fleet comprises over 100 owned and in-chartered vessels, including liquefied natural gas and ethane carriers, petroleum and product tankers, floating production systems and LNG floating storage units.

When asked if shippers can avoid the Middle East area, Bud Darr, group executive vice president, maritime policy and government affairs at MSC Mediterranean Shipping, said that "There are some things that a shipping company could do operationally, depending on point to point where the shipper and receiver are. But there are some places that can only be served through one avenue, such as Bab al-Mandab, so that might be an exception. It really depends on which trade you're in as to how much flexibility you might have."

How the attacks affect marine insurance is "still an open question. We have to watch that going forward," he said.

MSC operates 800 ships and five aircraft to move cargo over 300 routes and 520 ports of call.


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