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Red Sea Crisis

Houthi attacks could trigger supply chain crisis

Photo: Adobe Stock container ship passing through Suez canal
Houthi militia missile and drone attacks on merchant ships sailing through the Red Sea and the Gulf of Aden could spark a global supply chain crisis

Random missile and drone attacks on commercial vessels sailing through the Red Sea and the Gulf of Aden could spark a global supply chain crisis, according to industry experts at Xeneta, an Oslo-based leading freight market analyst. 

We do not yet have reports of attacks today but Xeneta noted yesterday’s attack on the 2016-built Maersk Gibraltar, a 10,000TEU container ship. A missile was fired at the vessel as she sailed between Salalah in Oman and Jeddah on Saudi Arabia’s Red Sea coast. The missile missed the 10,100TEU container ship.  

Xeneta’s Chief Analyst, Peter Sand, said “All ships transiting the Suez Canal must sail through the Red Sea and Gulf of Aden and the Houthi militia has made clear that any vessel is a target. I do not believe the Suez Canal will close. However, if there are further significant escalations then we cannot rule it out, even if it is just for a few days.”

Sand noted the chaos that followed the closure of Suez after the Ever Given’s grounding in 2021. The consequences of the Canal closure plunged supply chains into mayhem which took months to sort out. Now the backdrop is worse: global supply chains are already tightly stretched, with unprecedented delays at the Panama Canal, a result of drought and low water levels. 

“The ocean freight industry has been deeply scarred by Ever Given and is frankly terrified of any situation which threatens the closure of the Suez Canal,” Sand declared, noting that 50 ships transit the Canal every day with billions of dollars of goods bound for destinations in the Mediterranean, North Europe and the east coast of the US.

“We are already seeing ocean freight liner operators and owners choosing to re-route vessels away from the Red Sea and Gulf of Aden region,” Sand noted. “Due to the importance of the Suez Canal to global supply chains, even a small disruption can have big consequences. The main alternative is to sail around the Cape of Good Hope, which adds up to ten days sailing time for services from Asia to Europe and the East Mediterranean.” 

Houthi militia in Yemen have claimed that missile and drone attacks on merchant ships are in response to the conflict in Gaza.

TAGS: Suez Canal