All Eyes on the Suez Canal as Container Shipping Giants Halt Passage Through Red Sea

More major ocean carriers have halted their ships from entering the Red Sea as concerns of escalating attacks on vessels in the waterway’s chokepoint mount.

Mediterranean Shipping Company (MSC), CMA CGM, OOCL, HMM, Evergreen and Yang Ming are following in the footsteps of Maersk and Hapag-Lloyd in suspending operations through the Bab El-Mandeb Strait after a string of projectile attacks from the Yemen-based Houthi militia.

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As they reroute their goods elsewhere, the Hong Kong-based OOCL and Taiwan-based Evergreen have also temporarily stopped accepting cargo to and from Israel until further notice.

The suspensions came as two more commercial vessels were under fire Monday, with the MSC Clara and Norwegian oil tanker Swan Atlantic both attacked with naval drones originating from Yemeni territory. The Houthis claimed responsibility for both incidents. No crew members were injured on the Swan Atlantic.

Sourcing Journal reached out to MSC, which has not confirmed any details of the Clara attack.

On Friday, two container ships, Hapag-Lloyd’s Al Jasrah and the MSC Palatium III, were each hit with Houthi drone missile strikes. No crew members were injured, the companies confirmed. The Houthis also confirmed they targeted MSC Alanya, but the vessel was not hit.

The attacks on those MSC and Hapag-Lloyd ships occurred a day after another projectile nearly missed the Maersk Gibraltar vessel.

The moratorium on shipments through the Red Sea, a key passage that enables ships coming from Asia to travel through Egypt’s Suez Canal, could cause delays in global trade to close out 2023.

“Consumer goods will face the largest impact, though current disruptions are occurring during the off-peak shipping season,” said Chris Rogers, head of supply chain research, global intelligence and analytics, S&P Global Market Intelligence, in research released Monday. “It is also important to differentiate a short-term shock from a long-term realignment. In the short-term, ports will need to deal with a dearth of imports followed by a surge as the ‘global fleet’ bunches up as a result of the pauses and onward sailing.”

Admiral Ossama Rabiee, the chairman and managing director of the Suez Canal Authority, said in a statement Sunday that the navigation through the Suez Canal was flowing “normally as usual,” but said 55 vessels had shifted their routes around southern the Cape of Good Hope since Nov. 19. On that date, Houthi fighters hijacked a commercial ship in the Red Sea, the Bahamas-flagged Galaxy Leader, and brought it to the Yemeni port city of Hodeidah.

Rabiee called the 55 vessels “a significantly low” number in comparison to the 2,128 vessels transited the Suez Canal in that period.

He stressed that the Suez Canal will remain “the fastest and shortest route” for vessels traversing between Asia and Europe, saying transit times could be cut from anywhere from nine days to two weeks depending on the port of origin and port of destination.

But Rogers pointed out that any alternative routings are compromised either practically or economically.

“Transits via the Cape of Good Hope adds at least 10 days and over 15 percent to shipping costs,” Rogers said. “Land-based shipments by rail require crossing Russia while trucking from the [Persian] Gulf to Israel may only offset around 3 percent of shipping costs.”

Shippers also face higher freight rates based on “war risk” surcharges which have already been implemented by Maersk, Hapag-Lloyd and Israel-based container shipping company Zim. While the three companies have added fees of $20 to $100 per container for vessels bound for Israel, Zim is also charging higher rates to go around Africa.

In response to the increasingly frequent attacks from the Houthi rebels, U.S. Defense Secretary Lloyd Austin will announce the formation of Operation Prosperity Guardian, a new international maritime protection force aimed at ensuring the Red Sea is safe for commerce shipping, various reports indicate.

Austin is expected to make the announcement during his trip to the Middle East this week, according to The Guardian, which reported that the U.S. secured the involvement of Jordan, the United Arab Emirates, Saudi Arabia, Qatar, Oman, Egypt and Bahrain in the task force.

The U.S. response comes as international naval forces continue to fight back against any escalation out of Yemen.

A U.S. warship, the USS Carney, shot down 14 suspected attack drones over the Red Sea on Saturday, and a U.K. Royal Navy destroyer, the HMS Diamond, downed another drone that was targeting commercial ships, the British and American militaries said.

BP is joining the container shipping giants in rerouting their vessels, pausing all oil-tanker shipments through the Red Sea Monday, the multination oil and gas company said.

The Iran-aligned Houthi forces launched attacks against vessels in the region in protest against Israel’s invasion of Gaza, which was sparked by the surprise attack by terrorist organization Hamas on southern Israel Oct. 7, resulting in the deaths of roughly 1,200 civilians.