Fallout to Shipping from the Israel/Gaza Conflict

• U.S. Intelligence Reveals China-Houthi Network: American intelligence sources reportedly revealed that the Iran-backed Houthi rebels in Yemen are using Chinese-made weapons for their assaults on shipping in the Red Sea in exchange for refraining from attacks upon Chinese vessels. After Houthi leaders visited China in 2023 and 2024 to establish a supply chain, the group was able to obtain “advanced components and guidance equipment” for their missiles, according to Israel’s i24 News. The report claimed that the Houthis plan to utilize the Chinese weapons components to produce hundreds of cruise missiles capable of striking Persian Gulf states. Defense of Democracies
  

"As international scrutiny intensifies on the Houthis due to more than a year of attacks on Israel and commercial shipping, the group is likely seeking to diversify its supply chain to sustain its expanding missile capabilities. Additionally, the Houthis have learned crucial lessons from more than a decade of valuable battlefield experience. They have learned that exerting pressure on key states in the region, especially the affluent Persian Gulf states with their vast oil and gas reserves, may create significant global economic instability."

 — Joe Truzman, Senior Research Analyst and Editor at FDD’s Long War Journal

 

"China’s assistance to the Houthis is yet another signal that Beijing is actively contributing to global chaos and instability. From Chinese firms allegedly providing drones to Russia for its war in Ukraine to now providing support to a proxy group conducting strikes against Israel and the United States, China is cementing its status as an arsenal for autocracies."

 — Jack Burnham, Research Analyst

Newly recruited Houthi fighters marching past an image of their leader, Abdul-Malik al-Houthi, in December.   Credit...Yahya Arhab/EPA, via Shutterstock

"The U.S. mission to deter and degrade the Houthis is not working. In the last week of 2024, the militant group launched a new wave of missile and drone attacks on Israel and shipping lanes in the Red Sea which led to strikes by the United States on military targets on the coast of Yemen. All told, in December alone, the Houthis fired on several U.S. Navy and merchant ships, and conducted ten drone and missile attacks on Israel. Israel and the United States retaliated five times in total, knocking out port and energy infrastructure and Houthi military positions, but the Houthis continue to fire back. In the process, friendly fire brought down a U.S. FA-18 fighter jet, thankfully sparing its crew. This cost-benefit ratio is not sustainable. Houthi operations and ambitions have not been seriously eroded, but U.S. military readiness and reputation have. Washington needs a new strategy, one that is focused on the sources of the Houthis’ growing power and not simply on its symptoms on display in the Red Sea."

Financial Policy

"It's a bit like the autobahn", commented German container ship captain Tobias Kammann wryly, of the number of ships sailing around the southern tip of Africa, where not so long ago there were scant numbers of vessels travelling that way. That was prior to 2024, before the Yemen-based Iran-proxy Houthis began their mission of destroying the Red Sea as a navigable waterway for marine  traffic. The Houthis, considered by many countries (including much of Yemen itself) to be a terrorist group, is pulling its weight on behalf, they claim, of the 'Palestinian' cause.

Houthi military spokesman, announcing the targeting of three U.S. destroyers in the Red Sea to show support for the Palestinians in the Gaza Strip, and Hezbollah in Lebanon, in Saana, Yemen on September 27, 2024

 

Originally the Houthi leadership claimed it was acting in support of 'Palestine', where Gaza has been invaded by the Israeli military, in response to Gaza-based terrorist groups led by Hamas when thousands of Palestinian terrorists along with ordinary Palestinian citizens surged across the border into Israel to attack farming communities located close to the border between Gaza and Israel. Most of the looting was likely carried out by the civilians, leaving the bloody carnage of rape, mutilation and slaughter to the terrorists who later carried 250 Israelis -- from infants to the elderly -- back to Gaza, as hostages.

And while it may be perfectly true that the Houthi targets are primarily linked to Israeli shipping, few vessels have been safe from the pillaging of the Houthi pirates. Global shipping companies normally sail through the Red Sea and the Suez Canal to complete a voyage from Asia to Europe and back. Until roughly a year ago, when Houthi insurgents from Yemen began targeting vessels in the Red Sea with drones and missiles. 

 

Defense of Democracies

 

Shipping companies were forced to divert their cargo around the Cape of Good Hope at the southern tip of Africa. This represented a route 3,500 nautical miles and ten days longer than the normally efficient Red Sea/Suez Canal route commonly used. In response, Western-led naval fleets were tasked to quell the attacks. The zeal with which the Houthis -- from one of the poorest countries of the world -- took to their task in opposing all shipping through the Red Sea remained undiminished.

As the attacks continued and commercial vessels continue to avoid passage through the Red Sea, Middle East analysts have expectations that the Houthis would continue their commitment to maintain their attacks, regardless of their mentor the Islamic Republic of Iran seeing its influence diminish, following the near military collapse of Hezbollah in Lebanon and the collapse by insurgents of the Assad regime in Syria.

An average of 136 container ships travelled around the Cape of Good Hope weekly throughout 2024. In comparison, prior to the Houthi attacks, only 40 ships had used that route. The Suez Canal had handled ten percent of world trade, along with over a fifth of global container shipments. Diverting around Africa has effectively increased a requirement for vessels leading to greater numbers being deployed to maintain regular service over the longer route, and with that, shipping rates have surged.

Over a period of twelve months, the cost of shipping a container from Asia to Northern Europe rose by 270 percent. According to Stephen Cotton, general secretary of the International Transport Workers' Federation, there is concern for ship crews carrying bulk cargo like coal, iron ore and fertilizer when operators of the carriers fail to inform their crews of the routes they are scheduled to travel; they may end up going through the Red Sea.

"This sense of anxiety and not knowing if you're a target is an issue", he observed. Large container ships can pay up to $1 million to pass through the Suez Canal. Egypt has been deprived of revenue, reflecting a 70 percent fall in passage through the Suez Canal -- which has not helped Egypt's severely constrained budget. Moreover, it has been calculated that the Red Sea crisis is responsible for the industry pumping out an additional 35.7 million metric tons of carbon dioxide in those 12 months.

Should all shipping companies continue to shun the Suez Canal, the industry would likely arrive at new ways to make the route around Africa more efficient. One remedy, suggested Salvatore Mercogliano, maritime historian and associate professor at Campbell University in North Carolina, would be to build larger container ships. "Shipping will always find a solution", he commented. Meanwhile costs of shipping escalate, and prices of commodities to consumers soar.

Houthi soldiers march during a funeral procession for Houthi fighters killed during conflict with Yemen government forces, in Saana, Yemen   Center for Preventive Action