The flow of shipping containers through the vital Suez Canal freight corridor is being disrupted today as maritime shipping giants including A.P. Moller-Maersk and Hapag-Lloyd are diverting their cargo vessels from the Red Sea, following missile attacks on cargo ships in the region sparked by escalating violence triggered by the war between Israel and Hamas.
According to published reports, Maersk said Friday that it would pause all container shipments through the Red Sea until further notice, citing two near-miss attacks on its ships.
The change follows recent hikes in shipping fees charged by several container lines to offset their climbing insurance rates, as insurance companies add “war risk surcharge” fees for ships sailing near ports in the eastern Mediterranean Sea.
Continued congestion of cargo flows through the area could lead to major backups in global trade flows reminiscent of the snarls caused in 2021 when the Evergreen Line Corp.’s “Ever Given” ship ran aground in a sand storm and halted traffic through the waterway for a week.
The attacks are apparently being launched by Iran-backed Houthi militia forces based in Yemen, who are opposed to the U.S. and Israeli presence in the region and have been harassing passing ships in recent weeks as they steam to and from the canal. Given that the Red Sea is the major ocean freight lane into the Suez Canal, any further attacks that disrupt the normal flow of vessel volume has the potential to create major bottlenecks into the canal, according to John Donigian, Senior Director – Supply Chain Strategy at Moody’s Analytics.
“The recent Houthi attacks in the Red Sea are a stark reminder of the geopolitical risks facing global trade. While the immediate attacks were on oil and agricultural shipments, this trade route is utilized for a multitude of products and industries that rely on timely and cost-effective shipping. If attacks become more regular and frequent, the impact on global trade and supply chains could be far-reaching,” Donigian said in an emailed statement.
The stakes are high because the only alternative routes would entail major increases in travel distance that would have significant costs, extend lead times for delivering goods, and cause short term supply issues until trading partners adjust delivery schedules, he said.
Maritime trade association The World Shipping Council likewise said it was “deeply alarmed” about the escalating security crisis. “The disturbing surge of attacks on vessels poses an imminent threat to the safety and lives of the seafarers navigating these waters,” WSC said in a release. “The right of freedom of navigation stands as a fundamental right under international law, and must be safeguarded. The World Shipping Council urgently calls upon the global community to take decisive action to protect seafarers and freedom of navigation. The time for resolute international engagement is now.”
