The Houthi attacks against commercial vessels in the Red Sea are threatening to disrupt U.S. and global markets with delayed shipping times and increased good prices, The Washington Post reported.
The Yemen-based Houthis have launched several attacks since Oct. 7 against vessels in the Red Sea as part of retaliation efforts against Israel and its allies. In an effort to avoid the Houthis, commercial vessels are now taking longer routes to reach their destinations, resulting in delays and higher shipping costs, and ultimately increased prices for consumer goods in the U.S. and across the world, according to the Post.
Major shipping companies like COSCO, Maersk and CMA CGM, as well as several fuel tankers, previously utilized major trade routes in the Red Sea that cut through Africa and Asia, according to the Post. The recent spate of Houthi attacks has forced shipping vessels to move down and around South Africa’s Cape of Good Hope.
There goes the wave. Just about every westbound ship has turned south for the Cape. pic.twitter.com/cpIRJYpNQn
— Nathan Strang (@NavyStrang) December 19, 2023
This new route adds thousands of miles and potentially weeks of time to a vessel’s trip, according to the Post.
“It’s about an 8 percent longer journey, which is going to drive prices up quite a bit for ocean freight – that’s a material impact on prices for the goods themselves,” Ryan Petersen, CEO of Flexport, told the Post. Petersen noted that the higher costs associated with shipping these goods will affect the prices of “most of the stuff that you see in stores.”
Delayed shipping times also mean that some of the goods these vessels are carrying will no longer be in season when they finally arrive at their destination, making them less profitable to retailers and wholesalers, according to the Post.
“You can’t sell Valentine’s Day cards on St. Patrick’s Day,” George Kochanowski, CEO of shipping container company Staxxon, told the Post.
U.S. and other international consumers that relied on goods delivered through the Red Sea will feel the brunt of increased costs and delays, according to the Post. Though the immediate consequences affect companies that previously shipped through Red Sea routes, compounded traffic will “ultimately metastasize to the entire world,” Richard Danderline, CFO of Staxxon, told the Post.
U.S. Department of Defense Secretary Lloyd Austin announced in December that an international task force had been formed to combat the Houthi’s aggression in the Red Sea.
The Houthis have launched over 1oo attacks against ten commercial vessels, and managed to hijack one ship before bringing it back to a Yemeni port in November. There is no timeline for how long the Houthis will keep up their attacks, but the U.S. maintains its right to defend itself and its interests, a Pentagon spokesperson to the Post.
Jake Smith on December 28, 2023
