Explained: Impact of Houthi's attack on merchant navy vessels in Red Sea

The Yemeni Houthis have upped their attacks on vessels passing through the Red Sea, with their arsenal including helicopters, anti ship missiles and drones. This has forced several logistic companies to put a hold on the route while some are taking longer routes, escalating the freight charges by about 30 per cent and marked increase in surcharge of war risk imposed by insurance firms. The Red Sea route accounts for 12 per cent of global trade including 30 percent of all container movement and 10 per cent of seaborne oil, writes Dr. Ravella Bhanu Krishna Kiran.

Hyderabad: From the Israel-Hamas conflict to Russia’s endless battle against Ukraine, the world has witnessed the dangers of armed conflicts breaking out into a larger combat. In addition to these armed conflicts, Yemen’s Houthis attacks in the Red Sea, the world is going to face another long-standing trouble.

The route- The Iran backed Houthi rebel group is attacking with armoury of helicopters, anti ship missiles and drones from Houthi-controlled territory in Yemen, located close to the narrow Bab el-Mandeb, which connects the Gulf of Aden with the Red Sea that allows ships access to the Suez Canal, the shortest way between Europe and Asia.

The big picture- The Houthis are linked to the Israel-Hamas conflict because along with Hezbollah and Hamas, as they are part of an alliance that Iran refers to as “the axis of resistance” against Israel. All of the groups, like Iran, either dispute or reject Israel’s right to exist as a nation. Since a decade, they have been involved in a civil war with the Yemeni government backed by Saudi Arabia along with Western allies, whereas Iran is alleged to back the Houthis. Their support for Palestine is, therefore, also a sign of existing regional conflicts. Now, they are targeting commercial vessels, which is a part of their plan to exert pressure on the international community to force Israel halt its military operations in Gaza. In addition to influence on war in Gaza, they are possibly using their strike capability in the Red Sea to further exercise greater geopolitical influence in the region.

Attacks so far- According to the US Department of Defense, the Houthi militants have conducted over 100 one-way un-crewed aerial systems and ballistic missile attacks, targeting merchant vessels involving more than 35 different nations. In the last four weeks, Houthi militants have attacked or seized 13 commercial vessels and still hold 25 members of the MV Galaxy Leader hostage in Yemen. The rebels claim that they are attacking vessels en route to Israel but on 11 December, Norwegian cargo ship, the Strinda, was hit by a Houthi cruise missile despite the vessel being on the way to Italy. The Houthi threat particularly sparked concern on December 15, when the militants used anti-ship missiles against MSC PALATIUM III, a Liberian-flagged ship operated by the world’s largest shipping carrier MSC.

Size of disruption- The recent escalation in reckless Houthi attacks has spelled concern for international maritime trade, as the Red Sea is used for shipping through the Suez Canal. The Suez Canal saves time and resources by providing a direct route and thus remains the world's major route for east-west trade. There are about 400 commercial vessels cruising the southern Red Sea at any given time. Any disruption affects approximately 12 per cent of global trade including 30 percent of all container movement and 10 per cent of seaborne oil. According to the US Energy Information Administration, the Suez Canal accounted for 9.2 million barrels per day of total oil flows in the first half of 2023.

Driving insurance surcharge up- The continuous attacks on multiple merchant vessels, resulting in damage to several vessels, has led leading shipping companies MSC, CMA CGM, Hapag Lloyd, and AP Moller-Maersk, which cumulatively account for 53 percent of global maritime trade to suspend routes through the Bab el-Mandeb strait for the past weeks. The companies have to re-route their services through the Cape of Good Hope to protect the cargo and lives and safety of seafarers. This will delay shipments by 19 to 30 days. Insurance companies are either not ready to cover shipments on the route or are imposing an additional $5,200 war risk surcharge to the freight charges.

India and Red Sea crisis- The current security concern has raised fears of increased energy costs as India may have to use longer routes around the Cape of Good Hope. Indian maritime trade worth around $200 billion is heavily reliant on the Bab-el-Mandeb Strait for its crude oil, LNG imports and export of food products, apparel, and electronics to West Asia, Africa, and Europe. Any disruption to shipping through the strait could have a significant impact on India’s economy and security. If this crisis continues, it may disrupt crude shipments from Russia because there is a 9 percent rise in India's monthly intake of Russian oil in November from the previous month to 1.73 million barrels per day. The shipments are presently routed through the Suez Canal, and a wider conflict in the region that disrupts maritime trade may compel India to look at alternatives. In the meantime, increased risk could also lead to higher insurance premiums and freight rates, impacting Indian traders. According to Indian merchandise exporters, freight rates for Indian shipments headed to Europe and Africa could surge as much as 25-30 per cent if the ongoing security concern along the Red Sea trade route were to continue. It may also a possibility that considering India's cordial relations with Iran and Russia, Houthi rebels might spare India's interests in the region.

Operation Prosperity Guardian- Since April 2022, the Combined Maritime Force is working on maritime security in the Red Sea, Bab el-Mandeb and the Gulf of Aden. The US and French warships patrolling the Red Sea have shot down Houthi missiles and drones several times since the militants began the attacks. Moreover, in response to the escalating threat, the US has announced the creation of a new multinational task force named as “Operation Prosperity Guardian” including the navies of Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles Spain and United Kingdom. Some of those countries, part of the task force, will conduct joint patrols while others provide intelligence support in the southern Red Sea and the Gulf of Aden. So far only a few countries have announced their participation in the coalition. Particularly absent from the alliance are countries like Egypt, which is losing nearly $30 million a day in Suez Canal transit fees; Saudi Arabia, which uses the waterway to ship oil; and China, which ships goods to Europe.

What next-The Houthi rebels’ maritime offensive poses a significant threat to the free flow of commerce, endangers innocent mariners, and violates freedom of navigation, the fundamental principle of international law. Hence, countries that seek to uphold the freedom of navigation must come together to tackle the challenge posed by the Houthis launching ballistic missiles and drones at merchant vessels from many nations lawfully passing through international waters. Diplomatic efforts, military interventions, or addressing the root cause in Gaza are the options before them. Otherwise, the repercussions of this volatile situation extend beyond regional conflicts, affecting the interrelated network of global trade and economic stability.

(Disclaimer: The opinions expressed in this article are that of the writer. The facts and opinions expressed here do not reflect the views of ETV Bharat.)

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