(Reuters) – Transportation disruption in the Red Sea caused by Houthi attacks in Yemen could hit supply chains for months and lead to a shortage of tankers, business leaders told the World Economic Forum in Davos, Switzerland.
The Yemeni Shiite movement aligned with Iran is increasing attacks on commercial ships in the Red Sea in support of the Palestinians, saying it particularly targets Israeli boats or boats en route to Israeli ports.
These attacks have slowed trade between Asia and Europe and put several major powers on alert.
Maersk and other shipping companies have diverted some of their ships to southern Africa or suspended deliveries to avoid the Red Sea.
“It’s really disruptive because there is almost 20% of global trade that passes through the Bab el Mandab Strait (in the Red Sea),” said Maersk CEO Vincent Clerc.
“It is one of the most important arteries for international trade and for supply chains,” he told the Reuters Global Market in Davos.
Freight costs have more than doubled since the start of December, according to the Drewry Index, while insurance costs for deliveries via the Red Sea have also increased.
Banking industry executives worry that this crisis could lead to new inflationary pressures that could push back the expected cut in interest rates.
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Alternative routes via the Cape of Good Hope in South Africa extend delivery times by 10 to 14 days compared to a passage via the Suez Canal and the Red Sea.
Houthi attacks could lead to a shortage of tankers, the CEO of Saudi oil giant Aramco has warned.
“In the short term, the tankers should be available (…) but in the longer term, this could be a problem,” said Amin Nasser on the sidelines of the Davos Forum.
The United States formed an international operation in December to secure maritime transport in the region and carried out strikes against targets linked to the Houthis.
Two US officials told Reuters on Tuesday that strikes had targeted the Yemeni movement’s anti-ship missile firing sites.
US President Joe Biden is considering putting the Houthis back on the list of terrorist organizations, two US leaders told Reuters.
(Megan Davies, Jacob Gronholt-Pedersen, Yousef Saba and Jana Choukeir; French version Zhifan Liu)
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