Piracy off Yemeni coast raises global shipping costs

Bab Al-Mandab raids prompt a response from the US Marines while worrying traders, transport and insurance companies and possibly undermining the global fight against inflation.

Axel Rangel Garcia

US marines have acted against raiders in the Bab al-Mandab strait, where Israel's war on Gaza has intensified a proxy battle between Iran and Israel. It is worrying traders, sailors and insurers.

Piracy off Yemeni coast raises global shipping costs

Mohamed Sharki

last update on 19 Dec 2023

Pirates operating between the Horn of Africa and the Yemeni coast are active in the Bab Al-Mandab Strait and the Gulf of Aden, between the Red Sea and the Indian Ocean.

Their attacks are lifting the cost of shipping on through the trade route after a series of interceptions by pirates and attempts to seize ocean-going merchant vessels. Al Majalla looks at what is happening in one of the most important sea lanes in the world — and why.

Maritime trade routes through the Middle East are some of the most dangerous in the world and, therefore, the most expensive. And now, the outbreak of Israel’s war on Gaza has sent insurance costs higher on the London market.

The Drewry World Container Index rose an average of 12% for containers shipped by sea via eight waterways on global trade routes leading to Asia, Europe, and North America.

This is the biggest increase in 16 months after price and cost inflation eased throughout 2023, the pace of supply chains was restored, and the supply of semiconductors disrupted between Taiwan and the United States resumed.

It has revived fears that higher shipping costs could erode various attempts worldwide to get inflation down to targets typically around 2.5%. According to Marcus Baker, head of maritime affairs at Marsh Insurance Company, premiums have tripled after increased attacks on commercial ships in the Red Sea.

The cost of shipping 40-foot containers from Shanghai to Los Angeles increased by 12% to $2,322. From Rotterdam to China, it is up by 25%, the most significant increase in sea freight cost in three years. But it remains less than it was during the COVID-19 pandemic, according to Bloomberg.

AFP — The US Central Command said in a post on the X website that the ship “Strenda” reported damage that caused a fire on board, adding that a US Navy destroyer heard the ship’s distress call and provided assistance.

Maritime trade routes through the Middle East are some of the most dangerous in the world and, therefore, the most expensive. And now, the outbreak of Israel's war on Gaza has sent insurance costs higher on the London market.

Israel's war on Gaza

Some of the attacks on shipping are being launched under the pretext of support for Palestinians being killed under Israeli bombardment in Gaza, which has reached 20,000 deaths.

Interrupting voyages with missiles or drones, usually from Yemen, is seen as a means of support to apply pressure on Israel and its European and US allies for respite for the Palestinians in Gaza. But such attacks on shipping are more of a proxy war between Iran and Israel for wider geopolitical purposes.

Pro-Iranian Houthi groups have been accused of being behind the attacks in the Gulf of Aden on several commercial ships heading between Asia and Europe.

Media statements attributed to the "Yemeni revolutionaries" linked piracy to "solidarity with the (Palestinian) resistance because the shipowners are of Jewish origin". These acts are considered maritime terrorism and punishable under international law.

There has been an increase in attempts to attack commercial ships owned by businessmen from Jewish families in London or heading to Israel-friendly countries, including India.

The maritime security firm Ambrey said last month that pirates boarded an oil tanker belonging to a British company "linked to Israel" near the Yemeni coast in the Gulf of Aden in an attempt to seize control. It also said the incident was likely linked to regional political factors.

Marines arrest pirates

According to US reports, naval units of the Marines managed to rescue a cargo ship that was on its way to India after raiding and arresting the pirates.

Washington condemned the criminal act. National Security Adviser Jake Sullivan said, "Attacks on commercial vessels are completely unacceptable, as they threaten international trade and maritime security."

Navigational data showed the exit of an oil tanker, Central Park, from the Moroccan port of Safi on 12 November, heading to India, the largest market for Moroccan phosphate and phosphorus fertilisers.

Local media sources said the Office Chérifien des Phosphates (OCP) was able to export a cargo weighing 100,000 metric tons of ammonium phosphate via a giant ship that set off from the Atlantic port of Jorf Lasfar to India via the Suez Canal.

OCP's Compagnie Marocaine de Transit Aero-Maritime (COMATAM) undertook a series of complex preparations to load the cargo aboard the Patricia Oldendorf, which is 255m long and 46m wide. The giant ship was able to unload its cargo at the port of Adani Mundra in India, and the safe arrival of the largest amount of phosphate fertilisers was celebrated, according to The Times of India.

There has been an increase in attempts to attack commercial ships owned by businessmen from Jewish families in London or heading to Israel-friendly countries, including India.

Tehran accused

Although the Houthis have praised acts of piracy, the United States and its allies have blamed Tehran for these acts, which are also frequent in the Gulf of Hormuz, where 40% of the global seaborne oil trade passes.

EPA — An armed Houthi fighter watches the beach with the cargo ship Galaxy Leader in the background, which the Houthis seized off the shore of the Red Sea port of Saleef in Hodeidah Governorate, Yemen, on December 5, 2023.

Arab countries have four sea lanes that control 40% of global trade and energy: the Strait of Gibraltar, the Strait of Bab Al-Mandab, the Gulf of Hormuz, and the Suez Canal – the latter alone attracts 12% of the total trade.

The Suez Canal has been running for over 150 years, facilitating trade between Asia and Europe. It is the fastest and least expensive route to the Indian Ocean. The main alternative – along the Atlantic coast to the Cape of Good Hope in South Africa – is prone to piracy in the Gulf of Guinea off the coasts of Nigeria, Congo, and Angola.

Since 1990, French military units have been constantly deployed to monitor the trade route in areas that are troubled and torn by wars that encourage ship piracy.

New routes, old problems

India is seeking to rival China's Silk Road by launching the India Middle East Economic Corridor (IMEC) project, presented at the recent G20 summit and meant to connect South Asia and Europe across the Gulf.

It consists of two separate corridors – one linking India to the Arabian Gulf and the other linking the Arabian Gulf to Europe – and is intended to boost global trade using sea, rail, and road transport. It could start in the next ten years and has ambitions to change the global trade map between East and West.

Nonetheless, the Red Sea links the Mediterranean in the north and the Indian Ocean in the south and is among the most vital arteries for the flow of global trade, especially goods imported from East Asia, energy exported from the Gulf, and European products shipped to the Asian continent.

The Bab Al-Mandab Strait and the Gulf of Aden are more prone to attacks on ships. It was one of the direct causes of the June 1967 war. Piracy has been long practised in the region and has always been associated with a security vacuum and civil and regional wars. The most experienced and dangerous are the Somalian pirates.

But EU countries can't divert supplies from the East, whether consumer goods or energy products. An industry expert quoted recently in the Financial Times explained, "The Red Sea route matters; it matters even more for the Europeans who get all their Middle Eastern oil and LNG through the Red Sea."

+ / -