Evergreen, BP latest to pause Red Sea transit following attack on cargo vessels near Yemen

Mounting attacks by the Iran-aligned Yemeni Houthi militant group on ships in the Red Sea are disrupting maritime trade as leading global freight firms reroute around the Cape of Good Hope to avoid the Suez Canal.

A military spokesperson for the group said it launched a drone attack on two cargo vessels in the area on Monday, the Norwegian-owned M/V Swan Atlantic and the MSC Clara. 

These were the latest in a series of missile and drone strikes on shipping, which it says are a response to Israel’s assault on the Gaza Strip.

Oystein Elgan, chief executive of the Swan Atlantic’s owner Inventor Chemical Tankers, told Reuters the ship’s water tank had been damaged in the attack but all the vessel’s systems were operating normally. None of its crew had been injured.

Operator Uni-Tankers said in a statement the crew had brought under control a small fire after the vessel was struck on its port side. The ship was carrying vegetable oils and is sailing to Reunion Island.

‘Deteriorating security situation’

Taiwanese container shipping line Evergreen said on Monday that it has decided to temporarily stop accepting Israeli cargo with immediate effect and instructed its container ships to suspend navigation through the Red Sea until further notice.

Meanwhile, oil and gas giant BP also paused transit through the area. Shipping giants MSC, Hapag-Lloyd, CMA CGM and Maersk had done so earlier, according to a CNBC report.

“In light of the deteriorating security situation for shipping in the Red Sea, BP has decided to temporarily pause all transits through the Red Sea,” the company said. “We will keep this precautionary pause under ongoing review, subject to circumstances as they evolve in the region.”

The Suez Canal shipping route, which leads to the Red Sea, is a vital waterway for global trade, used to transport energy and other goods between Europe and Asia, and elsewhere. The route saves on time and expense by avoiding navigating around the entire Africa continent.

Several major freight companies — including MSC — have begun to sail around Africa instead, adding costs and delays that are expected to be compounded over the coming weeks, according to industry analysts.

The Houthis have attacked vessels in the Red Sea area in protest of Israel’s offensive in Gaza, launched in response to the Hamas attacks in southern Israel on Oct. 7. They say they are attacking vessels with links to Israel and have warned against sailing toward there.

Inventor Chemical Tankers has no ties to Israel, Elgan said. A U.S. Navy destroyer responded to the ship’s distress calls by moving toward the ship, the U.S. officials said.

Attacks have occurred in the Bab el-Mandeb Strait, the southern outlet of the Red Sea, between Yemen on the Arabian Peninsula and Djibouti and Eritrea on the African coast.

The Bahamas-flagged Galaxy Leader, meanwhile, was seized by Houthis last month.

The Houthis said on Saturday that real steps to ease the humanitarian crisis in the Gaza Strip would contribute to “reducing the escalation.” They also said that they were in Oman-mediated talks about its sea “operations.”

That was the first indication that the militia group may be willing to de-escalate. The U.S. has said it is seeking an expanded coalition to protect ships in the Red Sea and to send a signal to the Houthis.

The Norwegian government said that Norway would contribute up to 10 navy officers to a potential task force to protect shipping routes in the Red Sea.

Key shipping route

About 10 to 15 per cent of world shipping traffic goes through the Suez Canal, the shortest maritime route between Europe and Asia.

Travelling through the Cape of Good Hope at South Africa to avoid the Suez Canal will increase costs and add about 10 days to a journey from Asia to northern Europe and the eastern Mediterranean, experts said.

The attacks have stirred memories of 2021, when container ship Ever Given ran aground in the canal, blocking dozens of other container ships. The episode aggravated supply strains caused by the coronavirus pandemic, delaying shipments of goods by months and sending freight rates soaring.

Zvi Schreiber, CEO of global freight platform Freightos, told Reuters “it is unlikely that rates will spike to levels experienced during the pandemic” as a result of the current problems in the Red Sea.

“Shippers could expect longer lead times due to longer voyages, but operations should continue reasonably well,” he said.

Marco Forgione, director general at the Institute of Export and International Trade, was less sanguine, saying the attacks are occurring during a critical time in the buildup to the Chinese New Year.

“Container rates are going to go up, the cost of insurance is going to go up, all of this has an impact on the price point
for the consumer,” he said.