SHIPPING: Red Sea diversions to continue as US steps up attacks on Houthis – analyst

HOUSTON (ICIS)–Commercial vessels are likely to continue diverting away from the Red Sea in the peak season of summer as the US has stepped up attacks on Houthi rebels in Yemen, a shipping analyst said.

Lars Jensen, president of consultant Vespucci Maritime, said shipping capacity is likely to maintain its strong supply/demand balance if demand growth holds up.

“Additionally, [US President Donald] Trump has warned that counterattacks from the Houthis will de facto be seen as attacks performed by Iran and that Iran will be held responsible,” Jensen said. “For shipping this means an increased risk of escalation, which could include the Strait of Hormuz.”

Trump said on 15 March that “no terrorist force will stop American commercial and naval vessels from freely sailing the waterways of the world”.

In a social media post on 16 March, the president said the US military was carrying out aerial attacks on the terrorists’ bases, leaders, and missile defenses to protect American shipping, air, and naval assets, and to restore navigational freedom.

Jensen said the Houthis remain defiant and claimed to have attacked a US aircraft carrier with missiles and drone.

The Red Sea is also one of several global shipping choke points to be targeted by the US Federal Maritime Commission (FMC) for possible impacts to shipping that could include refusing entry to US ports by vessels registered in countries responsible for creating unfavorable conditions.

BACKGROUND
Global shipping capacity tightened dramatically in December 2023 when attacks by Houthis on commercial vessels in the Red Sea led to diversions around the Cape of Good Hope, leading to higher costs for carriers using more fuel and more ships for the longer journeys around the south of Africa, and higher container rates for shippers.

Houthi rebels began attacks as retaliation for Israel’s attacks on Hamas in the West Bank.

There was hope that after a ceasefire was declared between Israel and Hamas in January shippers could return to using the Suez Canal, but most of the major carriers continued to avoid the route.

The diversions have the largest impact on the Asia-Europe trade lane.

About 30% of all global container trade passes through the Suez, but only 12% of US-bound cargo.

Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), are shipped in pellets. Titanium dioxide (TiO2) is also shipped in containers.

They also transport liquid chemicals in isotanks.