The attacks by the Houthi rebels in Yemen on shipping in the Red Sea, and the quasi blockade that has been imposed on a shipping lane via which 12% of global maritime trade passes, have brought the importance of freedom of navigation to the front of our minds. In this context, an important source of information on what is happening is maritime risk management company Ambrey.
The British company, founded in 2010 and headquartered in Hereford, is a world leader on maritime security and risk management. Ambrey does not operate a private navy, but it provides security solutions, whether in the form of physical forces on ships or by digital means, including against the Houthi threat.
The company has stood out in its field in recent years, but the series of attacks since the capture of the Galaxy Leader on November 19 have made it more widely known as the company that provides the most timely and accurate intelligence on incidents in the entire threatened area, from the Red Sea to the Gulf of Aden and the Indian Ocean. Ambrey represents a reliable source for the world’s leading media in the most complicated and dangerous waters in the world.
In a special interview with "Globes", Ambrey CEO Joshua Hutchinson talks about the impact of the Houthi attacks in the Red Sea on global maritime trade, how trade with Israel has been harmed, and what the prospects are for the future.
"So far, we have seen very little impact on global maritime trade. Whilst there have been some major brands that have paused shipping through the Red Sea," Hutchinson says. "the majority have continued."
Last week, Danish shipping giant Maersk announced that it was preparing to return to the Red Sea, a somewhat vague statement from a company that, when it stopped using the route announced the fact immediately. Following the most recent spate of attacks, however, the company has again declared that it is suspending activity in the area.
Economic hit to Egypt and Lebanon
Another major shipping firm, Germany’s Hapag-Lloyd, has announced that it is sticking by its decision not to sail in the Red Sea. In the past few days, the container vessels MSC United VIII and Maersk Hangzhou have been attacked, the latter twice within twenty-four hours. There are ships that have found another solution, by including "unconnected to Israel" in their position reports, so that the Houthis won’t attack them.
As far as Europe is concerned, and not just Israel, the fact that shipping giants are avoiding the Red Sea and the Suez Canal is of critical concern. According to S&P Global, 14.8% of all imports of European, Middle East and North African countries from Asia and the Gulf go by sea. In the other direction, only 8.6% of imports by Asian and Gulf countries from Europe, the Middle East and North Africa go by sea.
Diverting from transiting through the Bab el-Mandeb Strait into the Red Sea and sailing around the Cape of Good Hope instead adds about fourteen days to the voyage. As reported by "Globes", the cost of shipping a container from Shanghai to Israel on a Maersk vessel has shot up from $1,600 to $7,600, while at Israeli shipping line ZIM the cost has risen from $2,200 to $4,000.
Israeli ports have been hard hit, especially Eilat. In October, Israel’s southerly port unloaded only about 9,000 cars, which compares with regular quarterly totals of 37,000-47,000, and that was simply the result of the outbreak of war, before the Houthis came into the picture.
How is the situation affecting trade with Israel and ZIM?
Hutchinson: "I am sure Israel will continue to receive maritime trade. However, the route for doing so may be assessed. The outlook on this is complicated, considering the increased threat to those trading with Israel coming from Iran, Hezbollah, Hamas and the Houthis. I would never use the word blockade, as this means all maritime traffic has ceased. Maritime data would show that Israel is still very much open for trade."
Israel is by no means the only country liable to be impacted by the Houthi attacks. First and foremost, there is Egypt. Suez Canal transit fees account for 2% of its GDP. There are as yet no clear data on how many ships have diverted their routes from the Suez Canal to the Cape of Good Hope since the nine major shipping lines, which account for 75% of the maritime cargo market, announced that they were ceasing to use the Red Sea.
Another casualty is Lebanon, a country whose economy collapsed long ago. According to the Customs Administration in Beirut, Lebanon’s agricultural exports shrank by 24% last year, to $756 million. 14% of the country’s food imports come from China ($2.67 billion), precisely by the route now made so problematic by the Houthis Lebanon is also dependent on that route for its exports, for which the main destination is the UAE.
Which are the Middle Eastern countries that are most affected by the situation?
"This is a another complex problem, because we would assume Egypt and Saudi Arabia have been affected, but the data would show that this is not the case. I think that if the maritime industry completely diverted around South Africa, then countries that are reliant upon Red Sea trade would be affected."
The Houthis have not just targeted container ships, but also oil tankers. Last week, an Iranian UAV attacked the tanker Chem Pluto when it was 400 kilometers from India, a very serious incident, not just for the Indians, but for Saudi Arabia as well.
Publicly available information
What is worrying is that even if the formation of the force to protect freedom of navigation in the Red Sea appears to have resulted in fewer attacks by the Houthis, it hasn’t stopped them. "Information on vessels and vessel operations is publicly available. Therefore the task of understanding where vessels are and who they are linked or affiliated with isn't hard. This is the first time on a global scale that this type of maritime terrorism has been used to target vessels," Hutchinson says.
If so, what new defensive measures are being introduced?
"Companies have gone back to using armed security. Companies have also started to used services like Ambrey’s digital watchkeeper service 'Guardian'. This provides both pre-voyage and live voyage services that give extra assurance, including risk analysis, voyage monitoring, and live event alerts. Finally integration with collation forces operating in the area is critical. Operation Prosperity Guardian will be a success once fully implemented."
How significant are the coalition forces?
"We know that twenty countries have joined, but only twelve have been announced. The task force will provide defensive air measures. This is really important across such a large operating space. However we are still seeing vessels being hit."
To sum up, what developments do you see in the near future?
"I think the dynamic threat area will spread from the Red Sea across the Indian Ocean, Arabian Sea, and into the Persian Gulf, combining a whole area of dynamic threat. I also believe the Houthis will grow in strength, and therefore the threat to Israel and to the Yemeni people will increase."
Published by Globes, Israel business news - en.globes.co.il - on January 1, 2024.
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