Saving Suez: As Red Sea attacks threaten global trade, what it means for India
economictimes.indiatimes.com
turns the Israel-Palestine war into a global economic problem. For weeks, ships transiting the strait, a choke point in the Suez Canal, have been
under attack from the Houthis, a group of highly trained, Yemen-based, Iran-backed militants with access to an array of sophisticated naval artillery. The attacks are part of the group’s offensive against Israel’s bombardment of Gaza.
At least 10 of the world’s biggest shippers and one oil supermajor have decided to avoid the canal, a passageway for more than 20,000 ships
a year, which account for 12% of global trade, 9% of oil demand, 6% of LNG imports and 30% of container shipments.
More than 300 ships have taken a detour of 6,000 nautical miles around the Cape of Good Hope this week. This has led to an increase in transit time, shipping rates and insurance premia, and threatens to send production schedules across the world awry.
ET spoke to ship owners, exporters, trade and industry bodies and insurers about the crisis. They all hope it will be short-lived, especially with the US setting up a task force to protect shipments.
Many fear that, if prolonged, the crisis would destabilise shipping rates that fell just recently after reaching dizzying highs during the Covid years. It will also add to inflationary pressures that are squeezing economies across the world.
“A total of 314 vessels were diverted between December 19 and 22,” says Dominique Nadelhofer, spokesperson of Kuehne +Nagel, one of the world’s biggest freight forwarders.
