What do 15,000 sheep, 7000 US sailors, that order for your new patio furniture and your recent “TEMU haul” have in common? They’re all affected by the shipping bottleneck in the Red Sea caused by the Houthis.
You may not know or care about
the Yemen-based Sunni Islamist Houthis, but their attacks on shipping on its
way to and from the Suez Canal are affecting your life and pocketbook. As they attempt to control the 14-mile wide seaway
known as the Bab
el-Mandeb (also known, appropriately, as “The Gate of Grief”), the Houthis
have recently fired ballistic missiles and drones at 45 ships, including US
Houthi Brigadier General
So dangerous has become this
passage, traversed by 15% of global shipping worth $1 trillion a year, that container-ship
owners are now diverting their vessels around the tip of Africa, adding 3-4
weeks of sailing time from China to Europe and adding almost $1 million to each
vessel’s shipping costs.
It used to cost $2500 to ship
one container from China to the US East coast.
Now it costs $6500. Maritime
insurance rates have also soared. But
worst of all, the added delivery delays mean there are about six million
shipping containers tied up at sea that should have been emptied and sent back
from the next load.
Remember those 15,000
sheep I mentioned? They were on a
ship that sailed from Australia on January 5th, headed for
Israel. But, unable to get through the
Suez canal, the vessel turned back after a month at sea with the animals
sweltering in a heatwave.
While you can switch from
shipping by sea to air freight for some cargos, the price difference can be
substantial. Containers on ships pay a
flat rate, regardless of weight. But air
freight costs about $2 per pound.
China’s answer to Amazon, TEMU,
ships about 4000
tons of stuff each day, enough to fill 40 777 jet freighters. TEMU had converted from air freight to
shipping by sea last fall, but TEMU is now back in the skies to keep deliveries
to about a week instead of a month.
There’s a coalition of 20
nations (10 of them helping anonymously) that is trying to keep the Red Sea
open to shipping though most of the work is being done by the US Navy. The task force is known as “Operation
Prosperity Guardian” which explains the mission well.
Until recently the Houthis had
only targeted Israeli ships, but more recently they’ve gone after French,
Chinese and EU-owned vessels… and the US Navy.
The Houthi’s Iranian-supplied drones have a range of 1100 miles and their ballistic missiles come at their targets at 3000 mph. This is the first time in history that anti-ship missiles have been fired in conflict.
So far the Navy has fired
about $400 million worth of defensive missiles to stop the attacks, one of
which was halted about one minute before it would have hit a US destroyer.
Logistics expert Michael
Giambrone from the OEC Group says
shipping delays may get worse. “It’s not
a question of if but when” a US Navy ship gets hit by a missile, he told me.
When American lives are lost
on this mission, watch out. You do
Gulf of Tonkin, I hope.