Drone and missile attacks – the escalation in the Red Sea threatens our raw materials supply
A series of attacks on container ships operated by Maersk, Hapag-Lloyd, MSC and China’s CMA CGM has led these carriers to temporarily avoid the Red Sea and the Suez Canal. The catastrophic consequences of the attacks, attributed to the Houthi rebels from Yemen, are dominating the media. The Suez Canal is essential not only for trade between Europe and Asia, but for the global economy. The media are sounding the alarm: Is the global economy under threat, and is a military escalation on the horizon?
Houthi rebels increasingly fire on cargo ships
In the past, the Iran-aligned Houthi rebels in Yemen have occasionally attacked ships in the Red Sea en route to the Suez Canal. Since the Hamas attack on Israel, these attacks have increased and have been extended to international container ships. One of the targets was the container ship “Al Jasra” operated by the German shipping company Hapag-Lloyd. Although no one was injured in the attack, the shelling triggered a fire on board. While this could be extinguished, the real blaze that this crisis has ignited is only just beginning to spread.
Longer transit times and rising prices
No one knows how long this crisis will last. At present, container ships are bypassing the strait by taking the route around the Horn of Africa. This results in longer transit times and higher costs. The detour of around 5,000 nautical miles means a 12-day delay for ships coming from Asia. This also means higher prices can be expected for the goods being transported. In addition, insurance costs for the ships and their cargo are rising.
Marie-Agnes Strack-Zimmermann calls for a German naval deployment
The situation is also beginning to escalate militarily. An international military coalition led by the United States, which includes Germany alongside the United Kingdom and France, is intended to ensure security in the area. The Chair of the Defence Committee, Marie-Agnes Strack-Zimmermann, is therefore calling for a German naval deployment to contain the terrorist attacks. Around 40 merchant ships (as of 16 December 2023) are located near the strait, and just over 100 in the wider area. All of them need protection, as they could become targets of the Houthi rebels.
Oil, in particular, could become more expensive
So far, four shipping companies have stopped using the Suez Canal, one of them from China. However, more could follow. China in particular is affected by the attacks, so additional shipping companies from the country may decide to follow CMA CGM’s example and avoid the strait. Overall, this would lead to rising prices for raw materials that reach Europe via this route—especially oil. The latter would mean that refuelling would become more expensive again. We, too, have had to plan for longer delivery times and, for example, are only receiving neodymium oxide after a delay of several weeks. In any case, we are keeping our fingers crossed that the situation in the Red Sea will soon return to normal.