Largest Houthi drone attack in Red Sea ⚔️ + Freight rates spike 📈

TRADE NEWS

Houthis Initiate Largest Red Sea Offensive To Date

In a major escalation in the Red Sea, Yemen's Houthi rebels, backed by Iran, launched their most extensive barrage of drones and missiles yet, targeting crucial shipping lanes. This unprecedented attack prompted the US and British navies to intercept the projectiles, marking a significant naval engagement. This occurred as the UN Security Council was convening to discuss the Houthi attacks.

The assault happened near the Yemeni ports of Hodeida and Mokha. Intelligence from Ambrey detailed sightings of missiles and drones, with US-allied warships advising rapid transit. The US Central Command reported that the Houthis used 18 drones, two cruise missiles, and one anti-ship ballistic missile. These were countered by F-18s from the USS Dwight D. Eisenhower and Arleigh Burke-class destroyers USS Gravely, USS Laboon, and USS Mason, along with the UK's HMS Diamond.

US Secretary of State Antony Blinken highlighted the threat to international trade, suggesting potential consequences for continued aggression. British Defense Secretary Grant Shapps characterized the attack as the largest by the Houthis in the Red Sea, emphasizing the UK's readiness to respond.

The Houthis, holding Yemen's capital since 2014, claimed the attack was in retaliation for American and Israeli actions in the Gaza Strip. However, their targets increasingly lack direct connection to Israel, complicating the situation.

The Red Sea is a vital trade route, linking Asia and the Middle East with Europe, and is crucial for global commerce. This attack, coinciding with a fragile ceasefire in Yemen, raises the possibility of a broader conflict, potentially involving Iran, and underscores the precarious stability in the region. Watch video report here.

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SHIPPING NEWS

Red Sea Crisis Spike Freight Rates

The ongoing attacks by Houthi rebels on vessels in the Red Sea is causing a ripple effect through the global supply chain, leading to imminent freight price increases and extended delivery times for various goods. Starting Monday, freight costs are expected to rise sharply, exacerbated by the necessity to reroute around Africa which delays deliveries.

Ocean carriers, struggling to return to Asia promptly, are cancelling sailings with little notice due to these diversions, as reported by Honour Lane Shipping to its clients. Affected products include spring clothing, electronics, and furniture, with retailers like Next and Ikea already noting potential stock delays.

The impact of longer transit times and elevated costs on supply chain reliability is significant. Retailers are responding by adjusting their shipping strategies, including rerouting shipments to the West Coast.

The most significant change comes in the form of increased freight rates. MSC, a leading global ocean carrier, announced new rates effective Monday, illustrating the rate hikes. The rates are set to be $5,000 for U.S. West Coast routes, $6,900 for East Coast routes, and $7,300 for routes to the Gulf of Mexico. These increases are a direct response to the altered shipping landscape and the need for carriers to cover additional costs incurred by longer, alternate routes.

According to Kuehne + Nagel, 419 vessels, with a capacity of 5.65 million TEUs, are rerouted due to the Red Sea situation, affecting the Suez Canal traffic and, by extension, Egypt's revenue from canal transit fees.

Logistics companies are also bracing for a container shortage, a throwback to the challenges faced during the Covid pandemic. This shortage, coupled with the rerouted and delayed shipments, could lead to more turbulent times ahead in 2024. Only time will tell.

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