The Red Sea crisis and its impact on trade

Talking about the current geopolitical situation in the Middle East, Maersk, Danish shipowning group, pointed out that in recent months the risk zone in the Red Sea has widened and Houthi attacks are spreading to wider and wider areas.

As the months pass, the overall picture is becoming more complex in the Bab el-Mandeb Strait, a strategic point for the global economy and trade. This small tongue of land, which connects the Red Sea with the Gulf of Aden, plays a key role in controlling shipments transiting from the Indian Ocean to the Mediterranean Sea via the Suez Canal.

 

Navi cargo al porto

 

Houthi rebels’ attacks

Houthi attacks on freedom of navigation in the Red Sea, which began on Oct. 19, 2023, target all commercial ships transiting the area, regardless of whether or not they have direct or indirect ties to the State of Israel.
To safeguard the integrity of the people, vehicles and goods being transported, more and more cargo ships are circumnavigating Africa via the Cape of Good Hope.

This has led to longer routes, with longer sailing times and higher costs for transportation, with as much as 40 percent price increases in fuel expenses and a significant increase in insurance costs. And, as a result, the overall situation has also had a heavy impact on the final prices of consumer goods.
In early May, “as a sign of solidarity with the Palestinian people,” Houthi rebel militias announced the start of the fourth phase of escalation targeting all ships transiting any area within their range with missiles and drones.

The impact on the Italian economy

The forecast for the near future is far from rosy. In fact, in the second quarter of 2024, there is an estimated 15-20% loss of capacity in container shipping between the Far East and Northern Europe and the Mediterranean.
The disruptive shipping actions carried out by the Houthis in that area, which have also caused port congestion in major hubs in Asia and Europe as a result, have been particularly effective in disrupting international trade and are having significant repercussions on Italian companies with reduced exports and supply difficulties, delays in the delivery of goods, and increased production costs.

As JFK Group, we are working hard to keep disruption to our customers to a minimum and are keeping the situation monitored to keep you up to date with developments in the crisis.