Shippers remain wary of Red Sea transit as regional tensions rise

A.P. Moller-Maersk, one of the world’s biggest container shipping lines, has yet to decide whether to resume shipping through the Red Sea amid heightened tensions over maritime security in the key strategic trade route, a company spokesperson said Jan. 2.

Maersk on Dec. 31 suspended its vessels transiting the Red Sea for 48 hours after one of its container ships was attacked by Houthi militants. The Maersk Hangzhou container vessel came under attack in the southern Red Sea from four small boats launched from the Houthi-controlled Yemeni coast.
The US Navy later destroyed three Houthi small boats, killing their crews, in response to the attack. Maersk had said Dec. 24 it would resume vessel transits via the Red Sea following a 10-day halt due to previous attacks.

Nevertheless, Maersk still listed 33 of its container ships as scheduled to traverse the Suez Canal over Jan. 2-9, according to its website. The spokesperson declined to confirm if those shipments would go ahead.

Iran dispatched a warship to the Red Sea after the US Navy destroyed three Houthi boats and rejected US and British calls to end its support for attacks by Houthi rebels. The destroyer Alborz traversed the Bab al-Mandab Strait, the choke point between the Red Sea and the Gulf of Aden, on Jan. 1, Iranian state media said.

Oil prices, which had largely brushed off concerns over possible disruptions in the Red Sea continuing over the last two weeks, rose sharply on Jan. 2, jumping over 2% to trade at $78.73/b by 1155 GMT.

Around 12% of global trade passes through the Suez Canal, representing 30% of all global container traffic and over $1 trillion worth of goods annually.

Other shippers
A number of shipping companies have said they would avoid, either entirely or as far as possible, transit through the Red Sea after Houthi militants, supported by Iran, announced their intention to join the ongoing war between Israel and Hamas, attacking dozens of vessels passing through the Red Sea in recent weeks.

As a result, tonnage transiting the Bab al-Mandab Strait has dropped by more than half since the beginning of December, S&P Global Commodity Insights data shows. Many have rerouted vessels via the Cape of Good Hope, a longer voyage with increased costs.

Mediterranean Shipping Co. (MSC), the world’s biggest container shipping line, said its voyages via the Red Sea are still suspended.

French container line CMA CGM said Jan. 2 it would continue rerouting some of its ships from the Red Sea amid ongoing security assessments. Hapag-Lloyd AG, which had also suspended shipping via the Red Sea, declined immediate comment on its current shipping plans via the route. Evergreen, which suspended Red Sea voyages on Dec. 22, did respond to requests for comment.

Energy companies BP and Equinor said they continue to re-route vessels away from the area while tanker owners Euronav did not respond to requests for comment.

Overall, an average 7.9 million b/d of crude oil and refined products sailed through the Suez Canal during the first 11 months of the year, S&P Global Commodities at Sea data showed.
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