Maersk’s Red Sea shipping pause highlights challenges for U.S.-led efforts to protect trade

The
threat
to
global
trade
in
the
Red
Sea
remains
high,
even
with
efforts
to
protect
commercial
vessels
from
attacks
by
Iranian-backed
Houthi
militants
based
in
Yemen.

Danish
shipping
giant Maersk‘s
decision
on
Tuesday
to

pause
Red
Sea
and
Gulf
of
Aden
transits
until
further
notice
underscores
the
difficulty
for
the
U.S.-led
initiative, called
Operation
Prosperity
Guardian.
U.S.
Navy
helicopters,
returning
fire,
sank
three
of
the
four
Houthi
boats
that
attacked
the
Maersk
Hanzghou over
the
weekend,
the
U.S.
military
said.

Due
to
the
threat,
more
commercial
ships
are
moving
away
from
the
Red
Sea
and
instead
going
around
the
Cape
of
Good
Hope
on
the
southern
tip
of
Africa,
analytics
provider
MarineTraffic
told
CNBC.
That’s
triggered
an
increase
in
container
rates
from
Shanghai.

So
far,

the
situation
has
affected
$225
billion
in
trade,
according
to
calculations.
Overall,
freight
carrier
Kuehne+Nagel
said,
it’s
impacted
330
vessels.
The
total capacity
is
estimated
at
4.5
million
containers,
or
20-foot
equivalent
units
(TEUs).
The
value
of
a
container
bound
for
the
Suez
is
$50,000,
according
to
freight
consultancy
MDS
Transmodal. 

Global
trade
data
provider
Kpler
said
the
number
of
ships
doing
that
jumped
to
124
this
week
from
55
last
week,
and
from
18
a
month
ago.
To
be
sure,
though,
there’s
been
a
modest
increase
in
container
ships
in
the
Red
Sea,
with
21
on
Tuesday,
up
from
16
on
Dec.
26.

“Simultaneously,
our
analysis
of
traffic
through
the
Bab
al-Mandeb
Strait
for
all
vessels
combined
reveals
a
consistent
downward
trend
in
crossings
for
both
northbound
and
southbound
vessels,”
said
Jean-Charles
Gordon,
ship
tracking
director
at
Kpler. (The
strait
connects
the
Red
Sea
to
the
Gulf
of
Aden,
which
opens
into
the
Arabian
Sea
in
the
Indian
Ocean.)

That
raises
the
stakes
for
Operation
Prosperity
Guardian.
To
achieve
results,
the
task
force
will
need
a
great
deal
of
naval
coordination,
according
to
U.S.
Navy
Rear
Admiral
(Ret.)
Mark
Montgomery,
a
senior
fellow
at
the
nonpartisan

Foundation
for
Defense
of
Democracies
who
served
as
policy
director
for
the
Senate
Armed
Services
Committee
under
Sen.
John
McCain.

“You
will
need
to
group
them
in
loose
convoys,
naval
coordination
of
shipping,
and
you
have
to
be
out
forward
with
helicopters
to
prevent
the
small
vessels
from
coming
at
the
chokepoints,”
said
Montgomery,
who
noted
the
outsized
expense
of
shooting
numerous
missiles
that
cost
millions
of
dollars
each.

The
coalition
needs
to
use
“deterrence
by
denial,”
which
is
a
strategy
that
aims
to
thwart
an
action
by
making
it
unlikely
to
succeed.
An
example
would
be
missiles
shooting
down
Houthi
missiles
or
drones, he
said.
The
operation
also
requires
“deterrence
by
punishment,”
Montgomery
added.
The
U.S.
helicopters’
actions
over
the
weekend
are
an
example.

He
acknowledged
the
Biden
administration’s
concern
about
escalation,
“but
a
failure
to
deter
could
also
lead
to
escalation
by
the
adversary,”
Montgomery
said.

“The
United
States
has
been
the
sole
guarantor
of
free
and
open
trade
and
has
always
done
something
about
it,”
he
said.

The
U.S.
leadership
has
led
to
some
tension,
however.
Ami
Daniel,
CEO
of
data
firm
Windward
and
a
former
officer
in
Israel’s
navy,
told
CNBC
that
the
branding
of
the
U.S.-led
coalition
led
France
to
only
want
to
protect
companies
that
are
headquartered
in
their
country.
CMA
CGM,
a
French
ocean
carrier,
is
being
escorted
by
that
country’s navy.

“Countries
are
protecting
their
interests.
What
I
see
is
a
lack
of
understanding
of
how
shipping
works
and
how
global
trade
works,”
Daniel
said.
“Trade
is
more
than
a
flag
a
vessel
is
associated
with.
130
vessels
are
owned
and
operated
by
US-domiciled
companies
but
not
U.S.-flagged.
When
you
expand
the
flag association,
there
are
nuances.”

But
Montgomery
pushed
back
on
this
notion,
saying
the
U.S.
has
been
branding
coalition
task
forces
like
this
for
30
years.

“This
is
an
excuse,
not
a
legitimate
gripe,”
Montgomery
said.

Still,
operators
are
making
decisions
case-by-case
about
whether
to
go
through
the
Red
Sea
and
Egypt’s
Suez
Canal,
which
can
lead
to
equipment
imbalances
and
possible
shortages
in
Asia
as
transit
times
increase,
according
to
Goetz
Alebrand,
head
of
ocean
freight
at
DHL
Global
Forwarding. 

“In
light
of
current
challenges
in
the
Suez
Canal,
many
carriers
are
opting
for
the
longer
route
around
the
Cape
of
Good
Hope
to
ensure
the
safety
of
crews
and
cargo,”
he
said.

–Graphics
by
CNBC’s


Gabriel
Cortés.