Houthi Strikes Disrupt Critical Red Sea Passage for Maersk Container Vessels

Maersk announced on Friday that it will suspend all shipping through the Red Sea for an indefinite period due to the threat of attacks on vessels using the important maritime trading route. This decision comes after the Danish company temporarily halted transits through the area following an attack by Houthi militants on the Maersk Hangzhou container ship. The US military responded to the attack by sinking three Houthi boats involved.

In recent weeks, Iran-backed militants engaged in the Yemeni civil war have intensified their attacks on commercial vessels, citing retaliation for Israel's conflict with Hamas. Maersk has stated that the security risk in the area remains highly volatile and at a significantly elevated level, based on available intelligence.

An Israeli navy missile boat patrols the Red Sea off the coast of Israel's southern port city of Eliat on December 26.

Alberton Pizzoli/AFP/Getty Images

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Maersk's decision to indefinitely suspend operations adds to concerns about the unstable security situation in the Red Sea, which is hindering one of the world's most vital trade routes, despite efforts led by the US to enhance security. The Suez Canal, linking the Red Sea and the Mediterranean Sea, usually handles up to 30% of global container trade.

The global economy could face significant disruption if the route remains closed for an extended period, causing delays in the delivery of essential goods, fuel, and food, leading to price increases.

On Wednesday, the US and 11 other governments, including Australia, Canada, Germany, Japan, and the United Kingdom, released a stern statement cautioning the Houthis against additional attacks.

Significant disruption to container trade

On Wednesday, Arsenio Dominguez, the secretary-general of the International Maritime Organization, mentioned that 18 shipping companies have opted to reroute their vessels to avoid South Africa. This decision has led to a 10-day increase in journey times and raised freight rates. Some of the companies that have diverted their vessels include Hapag-Lloyd, Evergreen Line, and MSC Mediterranean Shipping Company. Although CMA CGM has diverted some shipping, as of December 26, they were still intending to use the Suez-Red Sea route.

According to the shipping publication Lloyds List, container traffic has been most heavily impacted, while oil tankers and ships carrying grains or coal have seen relatively minimal changes. Maersk announced that all of its vessels will be rerouted south around the Cape of Good Hope in South Africa in an effort to provide customers with greater "consistency and predictability."

Container vessel Maersk Hangzhou sails in the Wielingen channel, Westerschelde, Netherlands on July 15, 2018.

Rene van Quekelberghe/Handout/Reuters

Maersk ships that had crossed the Suez Canal from the Mediterranean Sea, traveling east, will now be rerouted. These vessels will have to return back through the Suez Canal and sail around Africa to reach their destinations, according to a company spokesperson who spoke to CNN.

Due to the diversion, last month Maersk implemented two additional charges for transporting goods along many of the world's busiest shipping routes. The company has confirmed that these charges are still in effect.

For instance, additional charges have increased the price of shipping a standard 20-foot Maersk container from the Middle East to northern Europe by $1,000. According to logistics company Freightos, the average cost of transporting a typical 40-foot container from Shanghai to New York has risen to nearly $5,000 this week, a significant increase from $3,500 in mid-December.

Juliana Liu, Betsy Klein, Richard Roth and Eyad Kourdi contributed to this article.