Red Sea Shutdown: Why Houthi Attacks are Here to Stay

The Houthis are rallying for the Palestinian cause, the one thing that united an otherwise deeply divided Middle East

A Houthi forces helicopter approaches the Galaxy Leader on November 19. Source

The Yemen-based Houthi militant group continues to disrupt global trade on the Red Sea in support of the Palestinian cause. With no likely end to the situation in Gaza and a decade’s worth of efforts to subdue the Houthis largely feckless, the international community will likely pay dearly for the consequences of the war in Gaza moving forward. In this article, we look at the latest events affecting commercial shipping in one of the world’s critical strategic chokepoints, the response of the U.S. and its partners, and why the Houthis are here to stay.

Houthis take control of the Red Sea

Tensions on the Red Sea escalated on November 19 when Yemen-based Houthi militants hijacked the Bahamian-flagged cargo ship Galaxy Leader, docking the vessel in the port of Hodeidah and claiming it was Israeli-owned. A spokesman for the Houthis claimed the hijacking was in response to Israel’s “heinous acts against our Palestinian brothers in Gaza and the West Bank.” Although Prime Minister Netanyahu initially denied Israeli ownership, the vessel was later confirmed to be owned by Ray Shipping, a firm owned by Israeli billionaire Abraham Ungar. Given the complex and international nature of international shipping ownership structures, the Houthis’ ability to determine that Israeli interests indeed owned the Galaxy Leader is either a testament to their intelligence capability or potentially indicative of intelligence sharing from their Iranian backers.

The Houthis have since carried out at least 27 attacks on vessels since November 19, expanding the scope of their operations to U.S. ships on January 19 when they launched a drone attack on the American-owned bulk carrier Genco Piccardy. Vessels transiting the Red Sea have now openly declared neutrality to avoid Houthi attacks. For example, the Panamanian-flagged Star Blessing wrote “NO RELATE TO ISRAEL” in its destination and official designation port.

The Bab el-Mandeb or Gate of Tears, where most of these attacks have occurred, is a 30-kilometer-wide strategic chokepoint through which ships must transit to access the Suez Canal and move between the European, Middle Eastern, and East Asian markets. An estimated 21,000 vessels cross the strait each year, representing tens of billions of dollars worth of goods ranging from bulk commodities to manufactured goods and vital energy supplies for the European market. Global freight costs have surged due to the Houthi attacks, with the price to transport a 40-foot container from China to Europe rising 248% to roughly U.S. $4000 since November 21. These costs and increased insurance premiums forced some of the world’s largest shipping companies to suspend their Red Sea routes altogether, forcing them to ship around Africa’s Cape of Good Hope and increasing shipping times by 10–14 days. According to one shipping executive, these higher rates could increase the cost of each voyage by as much as $760,000.

Some of the world’s largest shipping companies have suspended their Red Sea routes altogether due to rising insurance and other costs

International insurance giant Lloyd’s of London announced on January 17 that it is continuing to insure vessels transiting the Red Sea, albeit at higher rates; however, some major insurers are refusing to cover ships owned by the U.S., U.K. or Israeli interests at this time. Should insurers declare the Red Sea a conflict zone moving forward, this would effectively shut it down to all but the most essential traffic, adding even more significant strain to the global economy. On January 12, the Combined Maritime Forces (CMF), a US-led multinational coalition based in Bahrain, advised vessels to avoid transiting the Red Sea for several days.

The ongoing Israeli operations in Gaza have caused the Houthis to vow more attacks on the Red Sea in response. With Prime Minister Netanyahu indicating no plans for withdrawal and tensions continuing to rise between Israel and Hezbollah in neighbouring Lebanon, the Houthi attacks on the Red Sea are unlikely to cease in the foreseeable future.