The global economy is growing impatient with the ongoing attacks launched by Houthis on global trade ships in the Red Sea.
The attacks have led to a severe decline in container shipping activity through the sea’s Gulf of Aden, Bab-el-Mandeb, and the Suez Canal, as more than 18 international shipping companies changed their trade route to go around South Africa's Cape of Good Hope. The move has raised the cost of shipping four-fold due to the longer distance along Africa’s western coast in the new route.
Automakers in Europe — particularly Germany — have notified customers of supply chain disruptions from China, Taiwan, and other East Asian countries due to delays in the arrival of some industrial and technological components.
Around 30% of ships have changed their traditional route via the Gulf of Aden, Bab-el-Mandeb, and the Suez Canal, through which about 20,000 cargo ships pass annually in normal times. This is out of a global car-go fleet of 105,000 vessels with a tonnage of at least 100 per vessel – the fleet transport-ed in 2020 about 11bn tons of various goods and materials overseas.
Maritime trade employs 1.3 million people on ships and docks. The more the conflicts, the bigger the shipping distances and costs – as happened during the Ukraine war and the ensuing wheat supply crisis.
UNCTAD said crude oil and refined products travelled longer distances in 2023 because Russia sought more distant, alternative markets, and the European Union also sought more distant, alternative energy suppliers.