UPS Offers Solutions for Shippers Affected by Houthi Attacks
Addressing Shipping Delays
The Role of Cold Chain Supply Chain
Analyst Outlook and Upside Potential
Market Performance
References
Houthi Rebels Continue Targeting Cargo Ships in the Red Sea
Houthi rebels, who currently hold significant control over Yemen, have been consistently attacking cargo ships in the Red Sea. As a response, a U.S.-led coalition launched air strikes against the group, but the attacks on shipping continue.
Recent Attacks
On Monday, a U.S.-owned container ship in the Gulf of Aden was hit by an anti-ship ballistic missile, fired from Houthi-controlled Yemen. The following day, a Greek-owned bulk carrier was struck in the Red Sea by another missile, as reported by the Iran-backed rebel group. Moreover, on Wednesday, the Genco Picardy, a U.S.-owned and operated bulk carrier, was targeted by a drone according to the U.S. military's Central Command.
Importance of the Red Sea Shipping Lane
The Red Sea serves as a crucial shipping lane for cargo traveling through the Suez Canal. The government of New Zealand reported in 2021 that approximately 30% of global container traffic passes through the Suez Canal. This translates to $1 trillion worth of goods being transported annually.
Impact on Shipping Routes
As a result of these attacks, some major shipping companies have opted to reroute their ships to circumvent the Cape of Good Hope in South Africa. However, this alternative route leads to longer voyages. T.D. Cowen estimates that this detour adds an additional eight to twelve days to journeys from the Middle East or Southeast Asia to the Port of Rotterdam in the Netherlands.
Be aware that the shipping industry is closely monitoring future developments in order to protect cargo and ensure safe passage through these critical shipping routes.
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