Houthi Attacks Disrupt Global Supply Chains

Summary:

  • Iran has seized vessel MSC Aries stating it was violating maritime law. The seizure was followed by an airstrike on Israel.
  • Volume through the canal is at record lows. Vessel traffic in the month of the Evergiven incident, March 2021, was 250% higher than in March of 2024. March did see an 8.5% increase in vessel traffic compared to February.
  • Transit times have leveled out, with a median of 1-2 weeks of additional time on major lanes.
  • 653 vessels have been rerouted around the Cape of Good Hope to avoid the Red Sea

Yemen Group Houthi Continues to Target Commercial Vessels

The Houthi rebel group continues to have a significant impact on supply chains, but attacks are beginning to slow. Over 400 airstrikes on targets in Yemen executed by the US and Britain have killed 37, and it is likely that the persistent counterattacks have caused the Houthi weapon supply to dwindle.

In addition to the slowing attacks, the US has announced that it would consider removing the “terrorist group” classification on the Houthis if they end their attacks in the Red Sea.

Iran Seizes MSC Aries

On April 13th, 2024, Iran seized container vessel MSC Aries stating that it was in violation of maritime laws. Following the seizure, Iran and allied countries including Iraq, Syria, and Yemen launched a large-scale air strike on Israel. Israel has confirmed that 99% of missiles were intercepted with the help of the US, UK, and Jordan. In retaliation, on April 19th Israel carried out a military strike near a military base in Isfahan. The scope of the attack was limited, but there are global concerns of the conflict continuing to escalate.

As of now, further rerouting measures have not been taken by carriers, but shipping associations are appealing to the UN for a greater military presence and more protection for vessels in the Middle East. project44 is continuing to closely monitor.

Map of container vessels in Red Sea vicinity

Volume through the Suez Canal

Since the attacks began in December, 653 vessels have rerouted to avoid the Red Sea. This has caused the lowest volume levels in recent history through the Suez Canal. In March of 2021, the Evergiven got stuck in the canal and halted passage for 6 days. Despite vessels not being able to pass through the canal, that month saw 250% more vessel traffic than March of 2024, which only saw the passage of 140 container vessels. March has seen an 8.5% increase in vessel traffic compared to February, but this is not a substantial enough number to prove that confidence levels for passage through the Red Sea are rising.

Monthly container vessel counts through the Suez Canal

Impacts to Transit Times

As vessels reroute to avoid the Red Sea, transit time increases by anywhere from a median of 7-10 days on lanes that leverage the canal. The charts below show the median transit time on major routes weekly through April 7th – April 13th.

Median weekly container transit time on major Red Sea trade routes

China to Europe, Southeast Asia to Europe, and Southeast Asia to the US East Coast have all increased a median amount of 10-14 days. Thankfully, this number does appear to have levelled out, so these transit times should represent the new normal as carriers continue to avoid the Red Sea. The chart below shows the median transit times from Asia to some of the major ports in Europe and the east coast of the US.

Median weekly vessel transit time from Asia

There is some level of volatility for all ports, but this is typical behavior even without disruptions in the Red Sea. Overall, the transit times have levelled out into a new normal until carriers regain confidence in passage through the Red Sea.

The vessel schedule reliability chart below tracks how late containers in transit are expected to be based on updates in schedules. This was hovering between 9 to 11 days for the major lanes but has adjusted to 8-10 days.

Weekly vessel schedule reliability - median days late

The chart above does show that carriers are continuing to publish schedules with the assumption that the vessel will pass through the Suez Canal, but the days delayed are matching more closely to the actual number of increased days on these lanes meaning that carrier schedules are likely more accurate now than they have been previously.

Historical Trade Through the Suez Canal

The Suez Canal was opened in 1869 to connect the North Atlantic Ocean to the Indian Ocean through the Mediterranean and Red Seas. Since then, it has become an integral trade route for global supply chains and saves 7-20 days of travel that would be needed for vessels to go all the way around Africa. Interruptions to the flow of vessels can have major impacts to trade as demonstrated in 2021 when a stuck vessel halted operations for six days.

As ocean carriers announce plans to reroute vessels around the canals, trade lanes that leverage the Suez Canal should be prepared for major delays.

Concern for Safety of Front-Line Seafarers

While project44 has made it a priority to provide frequent updates on the Red Sea crisis, the safety of the crew members on these ships remains top priority in these challenging times. They and their families are in our thoughts.

For questions or comments:

press@project44.com

Disclaimer: The information conveyed herein, shared solely for summary and not contractual purposes, comes from both project44 and third-party reporting. The project44 data does not include all available market information, and project44 has not undertaken to independently verify the third-party reporting. Similarly, this type of data changes from day-to-day. Accordingly, the reader should not rely on this reporting to make any business decisions, and project44 expressly disavows any liability arising from any such reliance.

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