WORLD SHIPPING: The world pays and stays silent - WHY?

It may be a bit pushed out of the headlines but what is happening in the Red Sea is dramatic and the most significant impact on the global economy of the war in Gaza.

A senior official at an American consulting company explains that in view of the fact that 30% of global container traffic normally passes through the Suez Canal, the Red Sea crisis has a huge impact on global supply chains.

The Houthi attacks on cargo ships resulted in an almost fivefold increase in the cost of shipping between Asia and Europe. This is estimated to fuel global inflation by adding up to 0.7% to the cost of the global economy's "core commodities".

The best alternative routes add to the voyages thousands of kilometers, over 10 days (between Asia and Europe) and hundreds of thousands of dollars in fuel costs for each such journey at sea. "Given the global nature of our economy, few companies or industries are immune to the impact.
The increased cost of raw materials and supplies, longer delivery times, production delays and distribution challenges will affect the entire manufacturing sector long after the crisis is over," he wrote.

The world seems to have come to terms with this reality...

Suez Canal revenues down nearly 50% due to crisis in Red Sea, says Egyptian president

The Suez Canal’s revenues dropped by at least 40-50% amid the recent developments in the Red Sea, President of Egypt Abdel Fattah al-Sisi said. "The situation in the Gaza Strip and events related to it affect Egypt as well. In particular, previously the Suez Canal brought in some $10 bln per day, and now we register a decrease in revenues by 40-50%," he said at the opening of EGYPES-2024 (Egypt Energy Show), adding that despite this, Egypt "still tries to meet its obligations to partners" in various sectors.

On January 16, Chairman of the Suez Canal Authority Osama Rabie also noted that the Suez Canal’s revenues were falling. In the first half of January the canal’s revenues fell by 41% year-on-year, while the number of vessels passing through the Suez Canal went down by 30% compared with the same period last year, with their tonnage having decreased by 41%. Egypt’s revenues from the Suez Canal exceeded $10 bln last year. The canal is one of the Egyptian government’s biggest cash cows and helps the country boost its dollar reserves.

New Attacks by the Coalition and the Houthis in the Red Sea Region

Following the attempted attack on the American destroyer Gravely, Yemen's Houthis from the Ansarallah movement launched new attacks on civilian ships heading towards the Suez Canal.

The Liberian- flagged container ship KOI (COLE), which was en route to the Israeli port of Eilat, was attacked with an anti-ship missile. The ship was chartered by the British firm Oceanix Services, the same company that previously chartered the supertanker Marlin Luanda, which the Houthis hit on January 26.

Another attack occurred approximately 57 nautical miles from Al-Hodeidah: according to the UK Department of Maritime Trade Operations, an explosion took place some distance off the starboard side of an unidentified ship. Fortunately, the crew was not injured.

Last night, US Air Force F/A-18 carrier-based fighters attacked the group's targets in the vicinity of the city of Al - Hodeidah. Local media reported a series of powerful explosions in the area. Later, the US Central Command confirmed that they had successfully targeted the drone control station.

About changes in the composition of the coalition ship group

The other day, the French frigate Alsace of the FREMM Class passed through the Suez Canal into the Red Sea. According to preliminary data, it is expected to replace the frigate " Languedoc " of a similar type.

Currently, the French are primarily providing air defense and anti-inflammatory defense for ships. However, with the start of the EU operation in February, it is possible that they will become more actively involved in the fight against the Houthis. Furthermore, in the region, the French Aerospace Forces have strike fighters, and the FREMM-class frigates themselves are equipped with a ship-based version of SCALP cruise missiles, which, in theory, could be used against Ansaralla.

The replacement of the British destroyer Diamond, which is currently located somewhere in the Gulf of Aden - Arabian Sea, is also expected. It has been out of sight in recent days, leading to many rumors about its current condition. There is no confirmed information yet, but a ship has already been spotted in the southern part of the Red Sea, which could potentially be the frigate Richmond, sent to the Red Sea region.

Since Yemen's Ansarullah started its operations against Israeli-affiliated shipping, cargo passing through the Suez Canal has decreased by approximately 85%

Suez Canal shipping has come to an almost complete stop after the Red Sea attacks. This has a major impact on the Israeli economy, they won't be able to handle this much longer.

According to an exclusive Yemeni source, Ansarullah is considering implementing a plan they call the 'Al-Aqsa Triangle', by closing all three of the Middle East's major waterways: Bab Al-Mandab, Strait of Hormuz, and the Suez Canal

Amid all the Red Sea drama, Ethiopia now appears to have access to the sea through an agreement with the breakaway region of Somaliland.

🔶️ Detailed negotiations to reach a formal agreement will be concluded in a month, said Redwan Hussein, national security adviser to Prime Minister Abiy Ahmed.

🔶️ The MoU will enable Ethiopia to lease access to the Red Sea from Somaliland to use as a military base and for commercial purposes for 50 years, Hussein said. Ethiopia can also build infrastructure and a corridor, he said at a briefing on Monday in the capital Addis Ababa attended by Somaliland President Muse Bihi Abdi.

🔶️ In October, Abiy in a televised lecture identified access to the ocean as a strategic objective and warned that failure to secure it could lead to conflict before toning down his comments.

🔶️ Abiy’s remarks drew rebukes from Eritrea, Somalia and Djibouti, all of whom described their sovereignty and territorial integrity as sacrosanct and not open for discussion.

🔶️ The Horn of Africa nation lost direct access to the sea in 1993, when Eritrea gained independence after a three-decade war. Its main trade route now runs along roads and a railway that link the capital, Addis Ababa, to a port in Djibouti, one of five neighbors with coastlines that include Somalia, Eritrea, Sudan and Kenya.

🔶️ More than a fifth of the world’s global commerce transited the Red Sea that connects the Indian Ocean to the Suez Canal before attacks on commercial vessels by Houthi rebels led some ships to re-route around Africa to avoid the violence.

🔶️ Amid all the Red Sea drama, Ethiopia now appears to have access to the sea through an agreement with the breakaway region of Somaliland.

Two U.S. Navy Amphibs Leave Red Sea Despite Houthi Attacks on Shipping

🔶️ The two U.S. Navy amphibs that were deployed to the Red Sea to deter Iranian-allied Houthi rebels have now been withdrawn to the Mediterranean, though attacks by Houthi forces continue unabated.

🔶️ On Thursday, USS Bataan and USS Carter Hall - two-thirds of the Bataan Amphibious Ready Group (ARG) - transited north through the Suez Canal. They are headed to meet up with the third vessel in their unit, USS Mesa Verde, and will reassemble as a full ARG.

🔶️ So far, the Biden administration has chosen not to use these capabilities (or other U.S. Navy and SOCOM assets) to counter the Houthi threat to merchant shipping. Since the beginning of the Israeli operation in Gaza, Houthi rebels have seized one Israeli-linked merchant ship and launched more than 100 drones and missiles at vessel targets in the Red Sea, including U.S. Navy warships.

🔶️ Saudi Arabia has reportedly urged the White House to refrain from striking Houthi launch sites, for several reasons. The Houthi movement is closely tied to Iran's Islamic Revolutionary Guard Corps, and it receives substantial financial and material support from Iran. Attacking Houthi units on the ground could scuttle ceasefire talks between Saudi leaders and Houthi forces, and simultaneously set back Saudi attempts to normalize relations with Iran. The Houthis also have the capability to retaliate by launching missiles at Saudi oil infrastructure, and have done so in the past.

🔶️ USS Bataan and Carter Hall may have a different mission now in the Mediterranean. The carrier USS Gerald R. Ford has had her deployment in the Mediterranean extended twice already in order to maintain deterrence against Iranian-aligned militants in Syria and Lebanon. The reconstituted Bataan ARG might have enough firepower to relieve Ford on station off Israel, allowing allow the carrier to go home at last (as previously planned, noted USNI). The carrier USS Dwight D. Eisenhower, which was originally scheduled to relieve Ford, is needed in the Gulf of Aden to assist in countering the Houthi drone threat.

U.S. Navy deploys missile destroyer Laboon to Middle East

The U.S. Navy missile destroyer Laboon has been deployed to the US 5th Fleet area of operations to help ensure security in the Middle East, the US Central Command said.

"USS Laboon transits the Suez Canal, December 18. Laboon is deployed to the US 5th Fleet area of operations to help ensure maritime security and stability in the Middle East region," the command said on X (formerly Twitter).

On December 15, US Defense Secretary Lloyd Austin ordered extending the deployment of the USS Gerald R. Ford aircraft carrier strike group in the eastern part of the Mediterranean Sea for a few more days. According to the Associated Press, the defense secretary's decision was driven by instability in the region that was caused by Israel's war in Gaza. This is the third time the aircraft carrier’s deployment in the eastern part of the Mediterranean Sea has been extended, the AP said.

The Washington Post reported that US forces in the Middle East have been subjected to at least 76 attacks by militants since October 17 amid the escalation of the Palestinian-Israeli conflict.

It appears that while some US-flagged merchant ships reversed course - ARC Liberty and Maersk Chicago - and others are still heading for the Suez to head south; some are holding their positions - Maersk Kensington & Green Bay - while they await for escorts to be established.

🔶️ In the meantime, the French-owned Malta-flagged CMA CGM Aqaba just ran (Dec 20/21) the Bab el-Mandeb [BAM] into the Gulf of Aden. CMA CGM Pegasus (w/armed guards aboard) just departed Djibouti after sailing through the BAM on Dec 18 and is showing a destination of Jeddah, Saudi Arabia in the Red Sea (but she may be heading to Asia).

🔶️ The French-owned CMA CGM Washington (Malta-flagged 14,360 TEU) and APL Salalah (Singapore-flagged 10,800 TEU and owned by CMA CGM) are the only containerships over 8000 TEU heading for the BAM in the Indian Ocean and will probably pick up an escort to run past Yemen.

🔶️ It appears that the French Navy is using the frigate Languedoc to escort their ships through the waters around Yemen and avoid the Houthi.

🔶️ It appears that France is withdrawing from Op Prosperity Guardian and will be conducting their own escort operation.

🔶️ The question is why the @USNavy @US5thFleet has not yet escorted Maersk Kensington through the BAM, as the ship has been sitting in the Red Sea for a week (since Dec 15), or Green Bay (since Dec 17) in the Gulf of Aden?

https://www.youtube.com/watch?v=HObhQdNXq2U