Houthi Ship Attacks Pose Bigger Impact On Supply Chain Than Early Pandemic

The continuous Houthi rebel strikes on commercial vessels in the Red Sea are causing more significant damage to global supply networks than the early phases of the COVID-19 epidemic, according to maritime advice firm Sea-Intelligence. The effects of the Red Sea issue on shipping have surpassed even the early difficulties associated with the epidemic, according to Sea Intelligence. According to Sea-Intelligence’s research of current vessel delays, the Cape of Good Hope already has a more dramatic effect on vessel capacity than the early pandemic, as ships divert from the Red Sea due to security concerns.

CEO of Sea-Intelligence Alan Murphy observes that the Red Sea issue has had a more significant impact on supply chains than the early pandemic, except for the “Ever Given” incident in the Suez Canal in 2021. An available vessel capacity might be employed to help, unlike during the COVID-19 pandemic. The availability of modern vessels in maritime operations nowadays is a significant difference from the epidemic era. Due to the pandemic’s high demand for vessels and limited capacity to hold cargo, there were significant supply chain disruptions. 10% of the world’s fleet is now out of commission; bringing these ships into service might address availability imbalances and schedule predictability.

According to Sea Intelligence, ocean carriers might switch more ships after the Chinese New Year to make up for the delays caused by the Red Sea crisis. Major corporations, including Tesla, Volvo, Michelin, Ikea, Next, and Crocs, have already been affected by the interruptions, resulting in production halts and delays in product releases.

The Red Sea issue is starting to affect energy markets, product tanker operators, and supply lines. There have been allegations of LNG vessel diversions, and Shell and BP have ceased exports across the Red Sea. These businesses are affected by K Line, MOL, Reliance, Torm, ADNOC, Hafnia, Stena Bulk, Equinor, and Euronav. Concerns about possible supply disruptions and shortages are being raised by some companies’ decision to stay away from the region.

The situation is shifting, and a shortage of tankers may impact product tanker pricing due to the longer transit times around the Cape of Good Hope. Analysts predict that the Houthi rebel group’s attacks in the Red Sea might last six months to a year despite counterattacks against them. This highlights the significance of developing a solution to guarantee cargo security and maritime safety.

Reference: CNBC

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