Houthi attacks in the Red Sea pushed shippers onto the long route around Africa, and it cost them in fuel, time and rented vessels. The detour around the Cape of Good Hope adds roughly 3,500 nautical miles and 10 to 12 days to a voyage, and around $1m in extra fuel for a single ship.
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The diversion began after Yemen’s Houthi rebels stepped up attacks on commercial vessels passing through the Bab al-Mandab strait, a channel only about 20 miles wide between Yemen and the Horn of Africa. The group said it was targeting ships connected to Israel, in response to the war in Gaza, though vessels with no such link were also hit.
What the Houthis actually did
The attacks escalated fast. In mid-November 2023, Houthi fighters hijacked the car carrier Galaxy Leader and released footage of the seizure. By January, Houthi weapons had struck container ships and bulk carriers, including the MV Genco Picardy, a US-owned ship carrying phosphate rock that caught fire after a drone strike on 17 January but suffered no casualties. Michelle Wiese Bockmann, an analyst at Lloyd’s List Intelligence, described counting 300 ships entering the danger zone in a single day that week, each with a crew of 15 to 25 people who had no say in the risk.
The US, UK and other countries responded with airstrikes against the group at sea and on land. The US also assembled a coalition, Operation Prosperity Guardian, to patrol the southern Red Sea. Egypt and Saudi Arabia, the region’s leading Arab powers, stayed out of it.
Why so many shippers chose the long way round
The Red Sea and Suez Canal normally carry about 12% of world trade, and closer to 30% of container traffic by some estimates. Within weeks, Maersk, MSC, Hapag-Lloyd and most of the other largest container lines had suspended Red Sea transits. BP halted all its oil and gas shipments through the region.
Insurance made the calculation stark. The risk premium for sailing into the Red Sea rose from 0.07% of a ship’s value at the start of December 2023 to between 0.5% and 0.7% within weeks, on top of the threat to crew and cargo. Against that, a shipping line weighed 10 to 12 extra days, an additional $1m in fuel, and the cost of finding vessels to cover the longer round trips. Many chose the detour anyway.
By late January 2024, container ship transits through the Red Sea had dropped 67% compared with a year earlier, and liquefied natural gas carriers had stopped entirely since 16 January, according to the UN Conference on Trade and Development. Before the crisis, two or three gas carriers a day had used the route.
What it cost everyone else
The rerouting rippled well beyond the ships themselves. Jan Hoffmann, UNCTAD’s chief of trade logistics, said average container shipping rates from Shanghai had more than doubled since early December 2023, rates to Europe had more than tripled, and even rates to the US west coast had risen, despite that route not touching the Suez Canal at all. Ships burning fuel for thousands of extra miles also meant more carbon emitted to move the same cargo.
The disruption landed on top of two other chokepoints already squeezing global trade: the war in Ukraine, which had curtailed grain shipments through the Black Sea, and a drought in the Panama Canal, which had cut ship transits there by 36% compared with a year earlier and by 62% compared with two years earlier. Anna Nagurney, an economist at the University of Massachusetts Amherst, noted that some traffic that had already shifted from the Panama Canal to the Suez Canal now had to shift again.
“Maritime transport is really the lifeline of global trade,” Hoffmann said. He added that the disruptions show how exposed it is to geopolitics and climate change.
