13% Of Global Seaborne Trade Affected By Houthis Attacks And Somali Pirates-BIMCO

In the first three weeks of March, the number of vessels sailing in the Suez Canal went down 51% year over year. Since November last year, shipping risk has gone up as the Houthis began attacking vessels in the waters of the Red Sea and the Gulf of Aden.

Simultaneously, the piracy activities that were happening off the eastern coast of Somalia have gone up, and since December, two bulk carriers and many fishing vessels have also been hijacked.

This marks the first-ever successful hijacking by the Somali pirates in nearly six years, per the latest update received from BIMCO.

This has led to a massive reduction in regional vessels since January this year. During the first three weeks of March, the number of vessels that were transiting via the Suez Canal went down 51% year on year, marking a 63% y/y drop in the gross tonnage.

Indian Navy has reportedly been active in the fight against Somali pirates, recovering one of the hijacked bulk carriers, the same update added.

The Houthi attacks on vessels in the Red Sea, coupled with an unexpected increase in piracy off the Somalia Coast, are disrupting worldwide trade, states Filipe Gouveia, a Shipping Analyst with BIMCO.

Last year, about 13% of seaborne trade transited through the areas. However, the attacks have lowered the number of vessels that are sailing in the zone by 50%.

Vessels increasingly try to avoid the impacted zones and sail for longer distances around the Cape of Good Hope, delaying cargo, tightening the supply, and raising freight rates.

The longer distances also boost bunker oil consumption, which increases voyage costs and carbon emissions. As specified in the update, shippers can try limiting cargo through the zone and boosting trade from unimpacted ones to circumvent the higher costs and minimize delays.

However, this is likely to be partial and restricted to specific commodities. Besides, circumventing conflict is hard for nations in the impacted zones, and their capability to import and/or export goods has greatly weakened.

Nation states strive to lower the threat level in the Gulf of Aden, Red Sea, and off the Somalia coast. A U.S.-headed coalition and a maritime operation by the EU are now attempting to enhance vessel safety in the Red Sea waters, with limited success so far.

Despite the efforts to improve safety, both groups continue to be active, and the Houthis have further threatened to expand attacks on vessels sailing in the Indian Ocean.

Unless the security and safety scenario in the zone improves significantly, vessels cannot return to their usual routes. As shipping is also responsible for transporting around 80% of global trade, delays and higher costs are likely to continue, stated Gouveia.

Reference: itln

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