Germany’s Hapag-Lloyd and Hong Kong’s OOCL said on Thursday they would avoid the Red Sea, the latest shipping companies to do so after attacks by Yemen’s Houthi group on vessels disrupted global trade, prompting the establishment of a naval task force.
Hapag-Lloyd said it would reroute 25 ships by the end of the year the key waterway as freight rates and shipping stocks have increased because of the disruption. Avoiding the Red Sea and Suez Canal means following a far longer route around Africa.
The Iran-aligned Houthis, who control much of Yemen, have been attacking ships passing through the Bab al-Mandab Strait at the southern end of the Red Sea for weeks in what they say is a response to Israel’s war in Gaza.
Traders are meanwhile scrambling to find alternative shipping routes or other options including air flights to get consumer goods to retailers, with journeys around Africa adding roughly 10 days extra to voyage times.
“Up to this moment, we have guided OOCL-operated vessels to either divert route or suspend sailing to the Red Sea,” Hong Kong-headquartered container group OOCL told Reuters in a statement on Thursday, the first time it had confirmed pausing sailings.
“We will continue to assess the feasibility of various options and will take appropriate countermeasures according to different conditions,” OOCL said.
Analysts have said the delays could start causing some shops to run low on stocks by February, though after the COVID-19 pandemic, more companies have sought resilience in supply chains by buying from exporters in different regions.
“Retailers have already started to move away from focusing solely on operational and logistical efficiency and speed, and have been focusing much more on operational resilience,” said Megan Paul, partner in the commercial team at Charles Russell Speechlys in London.
Finnish elevator maker Kone KNEBV.HE estimates some shipments could be delayed by two to three weeks but expects most deliveries to be on schedule, its communications manager said.
COALITION
Greece said on Thursday it would send a naval frigate to the area to help protect shipping as part of a multinational coalition announced by the United States to ensure safe passage through the waterway.
Greek ship-owners control about 20% of the world’s commercial vessels in terms of carrying capacity.
However, several countries the United States said would join the coalition have signalled they do not expect to send much naval power to the region while Saudi Arabia, which borders the Red Sea, was not listed as taking part.
The Houthi leader has meanwhile threatened to escalate attacks to include U.S. naval ships, raising the prospect of a wider conflict around the Bab al-Mandab strait.
A Hapag-Lloyd spokesperson said one of the company’s ships, the Al Jasrah, was attacked near Yemen on Dec. 15 on its way to Singapore and the company would take more decisions on routes by the end of the year.
The spokesperson said the company had received no detailed information about the U.S.-led naval coalition aimed at protecting Red Sea shipping.
Shipping companies remain in the dark over the new naval force being assembled by the United States, sources said.
Stablising the critical waterways will be vital to ensure that shipping traffic can fully resume, they added.
The fallout is also being felt directly in Israel. OCCL said on Saturday that “due to operational issues,” it would stop accepting cargo to and from Israel until further notice.
Israel’s most southern port of Eilat has seen an 85% drop in activity since Houthi attacks stepped up, the port’s chief executive said on Thursday.
Source: Hellenic Shipping News
