The pandemic and the war in Ukraine have shown how easily supply chains become unstable. Recently, the Houthi rebels have caused concern for shipping with their attacks in the approach to the Suez Canal. In an interview, expert Irina Haesle, member of the management board of the Association of German Shipowners (VDR) and responsible for maritime security issues, explains when it is too dangerous becomesto cross the strait.
This week, a merchant ship was attacked once again on a sea route in the Middle East. The Houthi rebels reportedly only want to allow freighters carrying aid supplies for the Gaza Strip through and regard all others as a “legitimate target” for their forces. What does this mean for trade by sea?
Irina Haesler: What the Houthi rebels have now announced is de facto a blockade of Israel. They want to ensure that no more goods come to Israel. However, the affected region in the Red Sea is the access to the Suez Canal. This is one of the busiest waterways in the world with 65 ships per day, 12 percent of global goods traffic passes through it. Therefore, the current situation is clearly a threat to the free movement of goods and supply chains. The Houthis’ announcement that they want to attack all ships bound for Israel, regardless of the flag, gives this a new quality.
Can the Houthis even distinguish which ship is targeting Israel and which is not?
That is exactly the risk of shipping companies. Nobody knows what criteria the Houthis will ultimately use to make their decision, and attacks can also go wrong, i.e. accidentally hitting other ships. There is therefore a general danger for all merchant ships currently passing through the Red Sea area.
The main focus right now is on the Strait of Bab el-Mandeb, which separates the Red Sea and the Gulf of Aden. What goods are transported there?
Everything is transported there: food, furniture, medicine, grain, cement, coal, and of course oil and liquid gas, which is particularly important for Europe. If nothing were to work in this area, it would not only affect a specific range of goods, but would be all-encompassing.
Europe gets most of its oil and liquid gas from the Red Sea. Europe and Germany would be particularly hard hit.
Basically, the current security situation is a problem for all countries. But the Suez Canal is the gateway to Europe, both for imports and exports. Trade between Europe and Asia takes place here. On the one hand, traffic there is important to ensure our security of supply. On the other hand, as an export country, Germany is particularly affected when merchant shipping is affected by unsafe sea routes.
Are there already noticeable effects?
There are no short-term effects so far. We don’t yet have empty supermarket shelves like we did during Corona times. However, this could change in the medium term if the situation worsens and ships have to divert via the Cape of Good Hope near Cape Town. This is the only alternative route and adds 14 days to the sea route. Of course, this causes delays in the supply chains. So far, this alternative route has only been used sporadically.
A longer sea route probably also means higher costs.
The calculation is difficult because the passage through the Suez Canal is also associated with high costs and insurance premiums for the route through the Red Sea have risen sharply. The costs associated with a longer sea route are primarily fuel costs. There may be changes in operational processes if the ship is in port 14 days later. And of course a longer route is also more harmful to the climate because many more CO2 emissions are caused than the short route through the Suez Canal.
How much more do shipowners currently have to pay for insurance if they want to sail through the Red Sea?
Unfortunately we have no insight into that. The amount of the premium depends on the insurer’s risk assessment, i.e. whether a ship has a connection to the USA or even Israel, for example. Some Israeli ships are no longer insured at all.
Which shipping companies and nations sail through the Red Sea waterway?
A lot of people drive through there. However, ships with a European connection make up a very large proportion. That’s why we in the association also want action from the state or European side.
When does it become too dangerous to sail through the affected strait?
That is a difficult question. Shipping companies are currently deciding on a very short-term basis whether to send their ship through certain sea areas or not based on current situation reports and safety assessments. At the moment there is no one who says: My ship is leaving in a week and there is no problem in sending it off. Unlike piracy, where the attackers approach the ship with a boat, in recent incidents the Houthis have attacked with projectiles from the air. Although there are many security precautions on board a ship and clear procedures in the event of certain threats, ships are at the mercy of air attacks. That’s what makes the situation so delicate.
Shipowners are calling for military protection in the Middle East to be strengthened. Is there currently no way around armament in the region?
I wouldn’t call it armament, it’s about more military resources. The USA called for an international partnership last week and, like France, is already there with frigates. The Norwegian-flagged tanker that was shot at on Monday would otherwise have been hit harder. We now need a coordinated EU mission together with Norway, the USA, Great Britain and whoever else wants to join in. This is a problem of larger proportions that, at the end of the day, threatens the prosperity and freedom of all of us. All European shipping associations spoke to each other this week and agreed that action must be taken from the EU side. The military presence of a community of states to secure the sea route alone is a signal to the region.
What does the mission in the Red Sea have to look like to actually be effective?
A ship or a frigate will not be enough. As shipowners, we propose to expand the scope of the Atalanta mission. This mission is running in the Horn of Africa off Somalia and is aimed at curbing piracy and has already been implemented. We don’t have the time now to spend two years discussing it; we have to quickly ensure more security. Missions that are already running are a good idea.
How explosive is the current situation with a view to further escalation of the Middle East conflict?
An escalation like the one seen now with Hamas’ attack on Israel has not occurred in the region for a long time. This has made the entire region unstable, on top of an already geopolitically unstable situation. In my opinion, anything is to be expected. It would be wrong to say that there is a catastrophe. But it would be just as wrong to simply assume that tensions will ease. We must at least prepare ourselves for the fact that the conflict will last longer and could even get worse.
The corona pandemic and the Russian war of aggression have shown how easily supply chains can falter. What would reduced traffic through these straits now mean for the global economy?
Restrictions on trade routes always have an impact on the global economy, whether it was the blockage in the Suez Canal or the disrupted supply chains during the Corona period. If goods can no longer be delivered on time and in sufficient quantities, then this has an impact on the global economy – especially if this is the case over a medium to long period of time. The longer such a blockade lasts and the less hopeful economists are about the situation, the greater the impact. And in the shipping industry, the effects are of course felt immediately.
So how likely is it that the situation in the Red Sea will threaten the supply situation?
I can’t give a percentage, the situation is too complex for that. One thing is clear: If maritime supply chains are disrupted, supplies in the relevant countries are at risk. A large proportion of the goods ultimately arrive by sea. This does not mean that we have to starve in Europe. But we will find that goods are unavailable or the delivery time of the sofa is three months instead of three weeks.
Victoria Robertz spoke to Irina Haesler
The interview is previously on capital.de appeared.