WASHINGTON: The ongoing Houthi attacks on shipping in the Red Sea have severely disrupted maritime trade, reducing container throughput in the region by 90% and escalating insurance costs, making it challenging for carriers to resume operations anytime soon, according to a report by the US Defense Intelligence Agency (DIA).
The report highlighted the financial strain on shipping companies, noting that re-routing vessels around Africa has added approximately 11,000 nautical miles and $1 million in fuel costs per voyage. Despite the increased distance and fuel expenses, this alternative is considered more financially viable than navigating the crisis-ridden Red Sea routes.
“For many shipping companies, the combined costs of crew bonuses, war-risk insurance – which has surged by roughly 1,000% compared to pre-war levels – and Suez Canal transit fees make the additional time and financial costs of travelling around Africa less expensive,” the report states.
As of mid-February, insurance premiums for Red Sea transits have risen to 0.7% to 1% of a ship’s total value, a significant increase from less than 0.1% before the escalation of Houthi attacks against a broader range of vessels in December 2023.
The DIA report indicates that at least 65 countries have been affected by these attacks, underscoring the widespread impact of the Houthi actions. The group has targeted over a dozen commercial vessels with drones and missiles, indiscriminately hitting various nationalities’ ships.
In one notable incident, the UK-owned cargo ship Rubymar was sunk in March, and in November, the Houthis claimed to have seized the Israel-linked Galaxy Leader. However, Japanese officials later identified the vessel as an NYK-operated ship with a 25-person multinational crew. The whereabouts of this crew remain unknown, with the last update from the EU coming in April.
The attacks have continued unabated, with UK Maritime Trade Operations reporting two incidents over the weekend. One of these involved a Greece-owned coal carrier, forcing its crew to abandon ship in the Mediterranean.
