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    Home»Business»Why the Shipping Industry Isn’t Rushing Back to the Red Sea
    Business

    Why the Shipping Industry Isn’t Rushing Back to the Red Sea

    By Staff WriterMarch 21, 20255 Mins Read
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    When President Trump ordered military strikes last weekend against the Houthi militia in Yemen, he said the militia’s attacks on commercial shipping in the Red Sea had harmed global trade.

    “These relentless assaults have cost the U.S. and World Economy many BILLIONS of Dollars while, at the same time, putting innocent lives at risk,” he said on Truth Social.

    But getting shipping companies to return to the Red Sea and the Suez Canal could take many months and is likely to require more than airstrikes against the Houthis. For over a year, ocean carriers have overwhelmingly avoided the Red Sea, sending ships around Africa’s southern tip to get from Asia to Europe, a voyage that is some 3,500 nautical miles and 10 days longer.

    The shipping industry has largely adapted to the disruption, and has even profited from the surge in shipping rates after the Houthis began attacking commercial ships in late 2023 in support of Hamas in its war with Israel.

    Shipping executives say they do not plan to return to the Red Sea until there is a broad Middle East peace accord that includes the Houthis or a decisive defeat of the militia, which is backed by Iran.

    “It’s either a full degradation of their capabilities or there is some type of deal,” Vincent Clerc, the chief executive of Maersk, a shipping line based in Copenhagen, said in February.

    After the U.S. strikes this week, Maersk said it was still not ready to go back. “Prioritizing crew safety and supply chain certainty and predictability, we will continue to sail around Africa until safe passage through the area is considered more permanent,” a spokesman said in a statement.

    MSC, another large shipping line, said that “to guarantee the safety of our seafarers and to ensure consistency and predictability of service for our customers,” it, too, would continue sending ships around Africa.

    It is not clear how long it might take the United States to decisively quell the Houthis, or if that goal is even achievable. Lt. Gen. Alexus G. Grynkewich, director of operations for the Joint Staff, said the latest attacks had “a much broader set of targets” than strikes during the Biden administration. He also questioned the Houthis’ capabilities.

    But Middle East experts said the Houthis had shown they could resist much larger forces and act independently of their Iranian patrons.

    “A military solution alone, particularly one that is focused on airstrikes, is unlikely to be sufficient to defeat the Houthi by permanently halting their attack activity,” said Jack Kennedy, head of country risk for the Middle East and North Africa at S&P Global Market Intelligence.

    The Houthis scaled back their attacks on commercial shipping when Israel and Hamas agreed to a cease-fire in January, and there have been no attacks on commercial ships since December, according to data from the Armed Conflict Location and Event Data Project, a crisis monitoring organization.

    But large shipping lines have yet to return to the Red Sea in a big way.

    In February, nearly 200 container ships passed through the Bab el-Mandeb Strait, the opening at the south of the Red Sea where the Houthis have focused their attacks. That was up from 144 in February 2024 but well below the more than 500 before the Houthi attacks began, according to data from Lloyd’s List Intelligence, a shipping analysis company.

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    The largest container shipping lines with the biggest vessels have stayed away from the Red Sea, with the exception of CMA CGM, a French company, but even its presence has been light. The company did not respond to requests for comment.

    Ships have not rushed back in part because executives fear that they might have to make expensive and abrupt changes to their operations if the Red Sea became dangerous again.

    The detour around Africa, for all its inconvenience and added costs, has bolstered the shipping lines’ profits.

    The companies had ordered hundreds of new freighters when flush with cash from the boom in global trade during the pandemic. Usually, a glut of vessels pushes shipping rates down. But that didn’t happen this time because ships were forced to use the Africa route, which increased the need for the ships and drove up rates on all big global shipping routes. Last month, Maersk forecast that its earnings would most likely be higher if the Red Sea opened at the end of this year rather than in the middle.

    That said, shipping rates from Asia to Northern Europe have recently fallen to their lowest level since 2023, according to data from Freightos, a digital shipping marketplace.

    Rates have fallen because fewer goods get shipped early in the year, said Rico Luman, senior economist for transport, logistics and automotive at ING Research. In addition, he said, a sudden burst of imports to the United States ahead of Mr. Trump’s tariffs appears to be almost over. And businesses may not be ordering as many goods because they expect consumer demand to soften in the coming months.

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