Top Shipping Firms Reroute Amid Houthi Threats, Disrupting Suez Canal Trade

Summary

  • Top shipping companies including Maersk and Hapag Lloyds ceased operations through the Red Sea because of militant threats.
  • Ships were redirected via southern Africa, a longer and more expensive route.
  • Maersk is preparing to resume shipping operations in the Red Sea and the Gulf of Aden due to a U.S.-led military operation.
  • Hapag-Lloyd is to decide on their next steps.

Shipping Firms Change Course Amid Security Concerns

Several of the global leaders in shipping, Maersk and Hapag-Lloyds among them, recently halted traversing the Red Sea. This decision followed targeting of vessels by Yemen’s Houthi militant group in December, which subsequently caused disruptions to worldwide trade via the Suez Canal.

Rerouting Through Southern Africa

As an alternative, these companies have shifted their paths via southern Africa. While this is a secure alternative, it is also a lengthier and costlier maritime journey compared with the Suez Canal, the fastest sea link between Asia and Europe.

Returning to the Red Sea

However, following the initiation of a military operation spearheaded by the U.S. aimed at guaranteeing the safety of commerce in the region, Maersk announced last Sunday its plans to recommence shipping activities in both the Red Sea and the Gulf of Aden.

Hapag-Lloyds’s Upcoming Decision

Similarly, a representative for Hapag-Lloyd noted on Tuesday that they will conclude the process tomorrow, but declined to offer further commentary. The company previously announced that by the end of this year, it would change the routes of 25 ships to avoid the area.

These developments have the potential to impact forex and trading depending largely on the state of the global shipping and logistics industry, which are integral to international commerce.

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