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Houthi attacks close vital Red Sea route for Maersk’s container ships

by Johnson Jr.
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Originally Published: 05 JAN 24 10:57 ET

By Anna Cooban and Robert North, CNN

London (CNN) — Maersk announced Friday that it will suspend all shipping through the Red Sea for the “foreseeable future” because of the threat of attacks on vessels using the vital maritime trading route.

The move comes after the Danish company paused transits through the area “until further notice” following an attack by Houthi militants on the Maersk Hangzhou container ship. The US military sank three Houthi boats involved in the attack.

The Iran-backed militants, who are fighting a civil war in Yemen, have ratcheted up their attacks on commercial vessels in recent weeks in what they say is retaliation for Israel’s war against Hamas.

“The situation is constantly evolving and remains highly volatile, and all available intelligence at hand confirms that the security risk continues to be at a significantly elevated level,” Maersk said in a statement.

Maersk’s indefinite pause adds to fears that the febrile security situation in the Red Sea is choking one of the most important trade routes in the world despite US-led efforts to increase security.

The Suez Canal, which connects the Red Sea to the Mediterranean Sea, typically ferries as much as 30% of global container trade.

A prolonged closure of the route could disrupt the global economy by delaying deliveries of goods, fuel and food, and pushing up prices.

The US and 11 other governments, including Australia, Canada, Germany, Japan and the United Kingdom, on Wednesday issued a strongly-worded statement warning the Houthis against further attacks.

“The Houthis will bear the responsibility of the consequences should they continue to threaten lives, the global economy, and free flow of commerce in the region’s critical waterways,” the countries said in a joint statement.

‘Significant’ disruption to container trade

Also speaking Wednesday, Arsenio Dominguez, secretary-general of the International Maritime Organization, noted that 18 shipping companies have rerouted around South Africa, adding 10 days to journeys and increasing freight rates.

Hapag-Lloyd,Evergreen Line and MSC Mediterranean Shipping Company are among the companies that have diverted their vessels. France’s CMA CGM has diverted some shipping but as of December 26 was still planning to use the Suez-Red Sea route.

Shipping publication Lloyds List reported Friday that container traffic appeared worst affected, while movements of oil tankers and ships carrying grains or coal were so far largely unchanged.

Maersk said in its statement that all of its vessels will be diverted south around the Cape of Good Hope in South Africa in the hope of offering customers more “consistency and predictability.”

“We do encourage customers to prepare for complications in the area to persist and for there to be significant disruption to the global (trade) network,” the company added.

Maersk ships that had already passed through the Suez Canal from the Mediterranean Sea, heading east, will also be rerouted. Those vessels will now have to return back through the Suez Canal, and sail around Africa to reach their destinations, a company spokesperson told CNN.

Last month, Maersk introduced two new charges to transport goods along many of the world’s busiest shipping routes because of the diversion. The company said Friday that those charges remained in place.

For example, the charges have added another $1,000 onto the cost of transporting a standard 20-foot Maersk container from the Middle East to northern Europe.

According to logistics company Freightos, the average cost to ship a common 40-foot container from Shanghai to New York climbed to an average of almost $5,000 earlier this week, up from $3,500 in the middle of December.

Juliana Liu, Betsy Klein, Richard Roth and Eyad Kourdi contributed to this article.

The-CNN-Wire
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Maersk

**This image is for use with this specific article only** Container vessel Maersk Hangzhou sails in the Wielingen channel, Westerschelde, Netherlands on July 15, 2018.

Rene van Quekelberghe/Handout/Reuters

05 Jan 24

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