How drone attacks in the Red Sea could cause major disruptions to global trade (2024)

US and British militaries say they've shot down 15 attack drones over the Red Sea as more major shipping firms suspend passage through a corridor vital for global trade.

Houthi rebels in Yemen have launched a series of attacks on vessels in the Red Sea, one of the world’s busiest shipping routes, and have launched drones and missiles targeting Israel as theIsrael-Hamas warthreatens to spread.

15 drones downed

US Central Command said the destroyer USS Carney "successfully engaged 14 unmanned aerial systems" launched from Houthi-controlled areas of Yemen.

The drones "were shot down with no damage to ships in the area or reported injuries," Central Command tweeted.

UK Defence Secretary Grant Shapps said HMS Diamond fired a Sea Viper missile and destroyed a drone that was "targeting merchant shipping".

The overnight action is the first time the Royal Navy has shot down an aerial target in anger since the 1991 Gulf War.

How drone attacks in the Red Sea could cause major disruptions to global trade (1)

Mr Shapps said attacks on commercial ships in the global trade artery by Yemen's Houthi rebels "represent a direct threat to international commerce and maritime security".

"The UK remains committed to repelling these attacks to protect the free flow of global trade," he said in a statement.

HMS Diamond was sent to the region two weeks ago as a deterrent, joining vessels from the US, France and other countries.

A month of attacks

In early December the US military said it shot down a drone from Yemen's Houthi group amid four attacks against three separate commercial vessels in the southern Red Sea.

A spokesperson for the Houthi group's military said the two ships were targeted after they rejected warnings, without elaborating.

In a broadcast statement, the spokesperson said the attacks were in response to the demands of the Yemeni people and calls from Islamic nations to stand with the Palestinian people.

Since then, a series of attacks have occurred.

Global shipping becomes a target

As a result of the attacks, several major global shipping companies have suspended passage through the Red Sea.

On Friday, two of the world's largest shipping companies, Maersk and Hapag-Lloyd, called off passage through the sea until further notice.

"Following thenear-miss incident involving Maersk Gibraltar yesterdayand yet another attack on a container vessel today, we have instructed all Maersk vessels in the area bound to pass through the Bab al-Mandab Strait to pause their journey until further notice," the company said in a statement.

Maersk on Thursday said its vessel Maersk Gibraltar was targeted by a missile while travelling from Salalah, Oman, to Jeddah, Saudi Arabia and that the crew and vessel were reported safe.

How drone attacks in the Red Sea could cause major disruptions to global trade (2)

On Saturday, French Container Shipping company CMA CGM and the Mediterranean Shipping Company followed suit.

"The CMA CGM Group is deeply concerned about the recent attacks on commercial vessels unfolding in the Red Sea Region," it said in a statement posted to its website.

"We have been taking over the past days increasing prevention measures to ensure the safety of our vessels and their crews navigating these waters.

"The situation is further deteriorating and concern of safety is increasing."

MSC, one of the world's largest freight shipping lines, said one of its container vessels had been targeted in the Red Sea on Friday and it was halting traffic through the strait until it was safe.

These companies ship food, clothing, chemicals and pharmaceuticals as well as industrial machinery and refrigerated and oversized goods.

The importance of the Red Sea

The Red Sea is one of the most travelled waterways in the world, connecting to the Mediterranean Sea via the Suez Canal.

According to AP, about 10 per cent of the world's trade passes through the Red Sea.

A huge amount of Europe's energy supplies as well as food come through the waterway.

However, the global oil market has shrugged off the most recent attacks.

Prices have fallen and the market is more worried about weak demand in major economies.

Negative effects on trade

The Australian Peak Shippers Association and Freight and Trade Alliance have released a statement about the implications for Australia the suspension of shipping in the Red Sea will have.

"Although this predominantly affects ships serving the Asia to North Europe and Mediterranean routes, recent experience has shown there will be serious impacts in other regions if the situation escalates or lasts for a prolonged period," it read.

FTA Director Paul Zalai drew comparisons to March 2021 when a ship ran aground in the Suez Canal.

"The impact of the waterway closure for 6 days threw vessel schedules internationally into disarray — this may fade into insignificance compared to the current conditions that are likely to continue for a significant period with other shipping lines likely to follow, understandably not wanting to endanger the lives of seafarers, the safety of vessels and the cargoes they carry," he said.

How drone attacks in the Red Sea could cause major disruptions to global trade (3)

"We are likely to know more in coming days — should marine insurers withdraw policies for ships passing through the area or declare the Red Sea a 'war zone', shipping lines will be commercially left with little option but to abandon this key waterway."

He said diversions could add 10 days to transit times and estimated arrival dates in North Europe and Mediterranean ports.

"We can expect that shipping lines will recover these costs through additional surcharges and cargoes."

In an Australian context, Mr Zalai suggests any prolonged closure will add to the costs of goods, already under pressure from the effects of wider inflation, especially if it flows to the supply of oil and natural gas.

According to Vessel Protect, which assesses war risks at sea and provides insurance, the single biggest immediate impact of the Houthi escalation has been increased insurance costs.

Consultancy S&P Global estimated that the detour would increase the distance between Rotterdam in the Netherlands and Singapore by 40 per cent.

Houthis vow to continue strikes

The Iran-aligned Houthis of Yemen are playing an escalating role in the conflict in the Middle East in a campaign they say aims to support Palestinians in the Gaza war.

The group, which controls most of Yemen's Red Sea coast, had previously fired ballistic missiles and armed drones at Israel and vowed to target more Israeli vessels.

Houthi spokesman Mohammed Abdel-Salam said on Saturday that the rebels had engaged in "communications and discussions" with international parties, brokered by Oman, on the Houthis' attacks on ships in the Red and Arabian seas.

He tweeted that the Houthis would continue targeting Israel-linked vessels "until the aggression stops" and the siege of Gaza is lifted.

He added that "any genuine steps responding to the humanitarian situation in Palestine and Gaza through bringing in food and medicine would contribute to reducing the escalation".

ABC/AP

Posted, updated

I'm a seasoned expert in global geopolitics, military affairs, and maritime security, having extensively studied and analyzed international conflicts, military strategies, and geopolitical trends. My knowledge spans historical events, contemporary developments, and the intricate dynamics of nations and non-state actors.

Now, diving into the provided information regarding the recent events in the Red Sea:

  1. Houthi Attacks and Drone Shootdowns:

    • The US and British militaries have reported the successful interception of 15 attack drones over the Red Sea.
    • Houthi rebels in Yemen, controlling areas around the Red Sea, have been launching attacks on vessels, posing a threat to one of the busiest shipping routes globally.
    • The US Central Command and the UK's HMS Diamond actively engaged and destroyed multiple unmanned aerial systems launched by the Houthi rebels.
  2. International Response and Naval Actions:

    • The UK Defense Secretary Grant Shapps emphasized that attacks on commercial ships in the Red Sea by Houthi rebels directly threaten international commerce and maritime security.
    • The Royal Navy's HMS Diamond, deployed as a deterrent, participated in the defensive actions, marking the first time the Royal Navy has shot down an aerial target in hostility since the 1991 Gulf War.
  3. Global Shipping Impact:

    • Several major global shipping companies, including Maersk, Hapag-Lloyd, CMA CGM, and MSC, have suspended passage through the Red Sea due to the escalating attacks.
    • The Red Sea is a vital waterway, with approximately 10% of the world's trade passing through it, connecting to the Mediterranean Sea via the Suez Canal.
    • The suspension of shipping in the Red Sea has raised concerns about potential negative effects on global trade, with comparisons drawn to the Suez Canal closure in March 2021.
  4. Economic and Trade Ramifications:

    • The Australian Peak Shippers Association and Freight and Trade Alliance expressed concerns about the implications for Australia due to the suspension of shipping in the Red Sea.
    • The potential prolongation of the situation could lead to increased costs of goods, potential supply chain disruptions, and additional surcharges imposed by shipping lines.
  5. Houthi Objectives and Regional Dynamics:

    • The Houthi rebels, aligned with Iran, are escalating their role in the Middle East conflict, citing support for Palestinians in the Gaza war.
    • The group controls most of Yemen's Red Sea coast and has previously targeted Israel with ballistic missiles and armed drones.
    • The Houthis have vowed to continue their attacks on Israel-linked vessels until perceived aggressions cease, tying their actions to the lifting of the siege of Gaza.
  6. Insurance Costs and Shipping Route Changes:

    • The Houthi escalation has led to increased insurance costs for vessels operating in the region.
    • Consultancy S&P Global estimates that the detour caused by the conflict could increase the distance between Rotterdam and Singapore by 40%, potentially impacting shipping routes and costs.

In summary, the situation in the Red Sea poses significant challenges to global trade, maritime security, and regional stability, with a complex interplay of military actions, economic repercussions, and geopolitical considerations.

How drone attacks in the Red Sea could cause major disruptions to global trade (2024)

FAQs

How drone attacks in the Red Sea could cause major disruptions to global trade? ›

Attacks on vessels in the Red Sea area reduced traffic through the Suez Canal, the shortest maritime route between Asia and Europe, through which about 15 percent of global maritime trade volume normally passes. Instead, several shipping companies diverted their ships around the Cape of Good Hope.

How did the Red Sea attack affect global trade? ›

According to a report by credit ratings agency Ind-Ra, the Red Sea disruptions have increased freight costs by 25-30 per cent. The working capital cycle in international trade is likely to worsen by 15-20 days and the impact could be higher in agriculture and textiles.

What is the threat to the global economy posed by attacks in the Red Sea? ›

The IMF and World Bank caution that the Israel-Hamas conflict and Red Sea attacks threaten global economy. The war's prolonged nature could worsen repercussions, especially on shipping through the Suez Canal. UN reports show a significant drop in traffic.

How did the Red Sea crisis affect the world? ›

Impact of Red Sea Crisis on the global economy:

Increase in the distance and operational shift due to rerouting of ships: The extra miles travelled and days lost due to trade diversion has translated into additional costs such as fuel costs and lost value of time-sensitive cargo.

How does the Red Sea attack affect the supply chain? ›

What are the impacts of the Red Sea shipping crisis? With 30% of global container trade transiting through the Suez Canal, the Red Sea shipping crisis is upending global supply chains. It is also increasing shipping costs, causing the prices of some routes — particularly from Asia to Europe — to surge nearly five-fold.

Why is the Red Sea important for global trade? ›

The passage between the Gulf of Aden and the Suez Canal serves as a primary link between Asia and Europe. Today, this maritime shipping route through the Suez Canal and Bab-el-Mandeb accounts for about 12 percent of trade and 30 percent of world container ship traffic.

Why is the Red Sea important to global trade? ›

The Red Sea owes its strategic importance for global trade to the Bab el-Mandab Strait which lies between Yemen and Djibouti. It is one of the world's busiest cargo and oil transit points with almost 12% of international merchandise trade passing through it.

What are three threats to global trade? ›

Question: What are three threats to the future of global trade? nuclear proliferationfree trade agreementsrogue statesequal income distributionterrorism.

What percent of world trade goes through the Red Sea? ›

Yet with Red Sea shipping responsible for 12-15% of global trade and 20% of global container shipping, repercussions are likely to become more severe as uncertainties continue.

What are the dangers of the Red Sea? ›

However, several marine creatures may be harmful and maybe even deadly for humans who come in direct contact with them. These include stonefish, lionfish, and scorpionfish.

What is Red Sea crisis in simple words? ›

The Red Sea crisis is an ongoing armed conflict in the Middle East. It is also known as the United States–Houthi conflict or United States–Iran proxy war. The crisis began on 19 October 2023 after attacks by the Houthi movement.

What countries are affected by the Red Sea crisis? ›

Major ports in Angola (Luanda), along the Gulf of Guinea in Cameroon(Douala), Nigeria (Lagos), Ghana (Tema) and Côte d'Ivoire (Abidjan), and in Senegal (Dakar) may be well endowed but are far outside traditional east-west shipping lanes around the Cape to offer cost-effective restocking and bunkering services for the ...

What is Red Sea crisis now? ›

The end of 2023 and the first quarter of 2024 are marked by major disruptions to global maritime trade flows as ships entering the Gulf of Aden and sailing through the Red Sea and the Suez Canal continue to face attacks by Yemen-based Houthis.[1] This new wave of disruption follows the unprecedented global logistics ...

What factors made the Red Sea an important trade artery? ›

The Red Sea has increasing economic importance as a result of the large oil reserves throughout the region and precious metal resources.

What is the biggest threat to supply chain security? ›

Supply chain security risks arise primarily from a handful of supply chain security threats.
  • Cybersecurity. ...
  • Lack of Visibility. ...
  • Physical Threats. ...
  • Vendor Risks. ...
  • Other Risks.
Jan 17, 2023

What is the problem with the Red Sea logistics? ›

The Red Sea crisis, going into its fourth month, has led to significant disruptions in global trade, prompting carriers to reroute shipments via the Cape of Good Hope. As a result, Indian companies across various sectors are experiencing delays in fulfilling orders, container logjams, and increased freight costs.

What effect did the Great War have on global trade? ›

Chief among these was the dramatic erosion in the share of Europe in world exports in general, and in the share of Germany in European exports in particular. Turning an eye to more long-run developments, World War I emerges as a clear inflection point in the evolution of the global economy.

How would a trade war affect global trade? ›

Trade wars can have a detrimental impact on global economic growth. As countries impose tariffs on each other's goods, trade volumes decline, supply chains are disrupted, and businesses face increased costs. These factors can lead to a slowdown in economic activity and reduced GDP growth.

Does the Red Sea help or hurt trade? ›

As the conflict in the Middle East simmers on, companies are increasingly avoiding the Red Sea trade route. The Red Sea has turned from one of the world's most important trade routes into a danger zone.

Was the Red Sea used for trade? ›

Contact between Rome and China depended on the Red Sea, but the route was broken by the Aksumite Empire around the 3rd century AD. From antiquity until the 20th-century, the Red Sea was also a trade route of the Red Sea slave trade from Africa to the Middle East.

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