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Red Sea attacks prompt rerouting of vessels, rate increases, and international military response

Red Sea attacks prompt rerouting of vessels, rate increases, and international military response - Universal Logistics Trade Alerts - December 19, 2023

Toronto, December 19, 2023

At least four container lines have abandoned shipping through the Red Sea and the Suez Canal because of the ongoing threat of attack from Houthi forces in northern Yemen.  MSC, CMA CGM, Maersk and Hapag-Lloyd have all signaled that they will take the Cape of Good Hope route, avoiding the risk of missile strikes, drone attacks or hijackings near Bab el-Mandeb.  The Houthi movement has threatened to attack any ship carrying cargo to Israel, and the militant group has the full width of the Red Sea in range off Hodeida.

OOCL has announced that it is stopping service to Israel, and as a result OOCL appears to satisfy the Houthis’ political conditions for safe passage.  Unlike its peers, OOCL has not announced plans to cease navigation through this strategic waterway.  If it continues to operate using the Suez Canal, it will benefit from a 1,900 nautical mile distance savings relative to competitors who choose the Cape route.  Spot prices on this core east-west tradelane have begun to spike, bringing a potential revenue opportunity for an industry with an otherwise bleak financial outlook this year.  As well, many steamship lines have introduced emergency risk or war surcharges, to reflect steps taken to ensure crew, vessel and cargo safety.

As a result of this ongoing situation, an international coalition has been created to protect ships sailing through the Red Sea, branded Operation Prosperity Guardian, this multinational security initiative includes Canada, the United States, the United Kingdom, Bahrain, France, Italy, Netherlands, Norway, Seychelles and Spain.  Some of the countries will conduct joint patrols while others provide intelligence support in the southern Red Sea and the Gulf of Aden.

For more information, please call David Lychek, Director – Ocean & Air Services at (905) 882-4880, ext. 1207.

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