Yemen– A shipping crisis in the Red Sea could be ending after Houthi militants said they would stop attacking most Western ships, provided that the Gaza ceasefire is fully implemented. Militants instead said they’d limit their attacks to Israeli vessels only.

“Vessels wholly owned by Israeli individuals or entities and/or sailing under the Israeli flag will remain prohibited from transiting the Red Sea, Bab-el-Mandeb, the Gulf of Aden, the Arabian Sea and the Indian Ocean at present,” said the Humanitarian Operations Coordination Center, which serves as liaison between Houthis and carriers.

Houthis will resume attacks “in the event of any aggression against Yemen by the U.S., the U.K. or the usurping Israeli entity.”

In early 2024, Yemen’s Houthi rebel group began attacking container ships traveling through the Suez Canal in retaliation on Israel and Israel’s Western allies for the Israel-Hamas conflict. Ocean carriers began diverting ships in response, directing travel around the horn of Africa through the Cape of Good Hope. This added around 14 extra days to a ship’s journey and was one reason container rates would spike over the ensuing months.

Ocean carriers have not announced an immediate return. But when they do, there could be disruptions.

“Global ocean carriers have announced they are still monitoring the situation and will return to Red Sea routes only when it is deemed safe,” said Rachel Shames, vice president of procurement for freight broker and logistics services provider CV International, in a blog post. “When the Red Sea becomes passable again, it is widely expected that a period of major schedule and port disruption will ensue, followed by overcapacity on global trades.”

On the positive side, Shames believes container rates will drop.

“Ocean carriers will try to rebalance capacity by scrapping vessels and employing blank sailings, but most industry analysts agree that rates are likely to fall once the initial disruption is worked through, at least until the next ocean freight disruption or volume surge,” she said.

Peter Sand, analyst at freight intelligence platform Xeneta, anticipates “chaos” in the coming weeks. He also thinks container rates could “collapse.”

“There will be severe disruption in the immediate period following a return of ships to the Red Sea,” he said in a blog post. “Ships will not be where they are supposed to be and will arrive at ports much earlier (or later) than scheduled. If large numbers of ships arrive at ports at the same time, it will cause massive delays and congestion that ripple across ocean supply chains.”

“Combined with record deliveries of new ships, the market will be flooded with capacity, with carriers needing to remove around 1.8m TEU to retain the status quo,” he continued. “Scrapping of ships will increase and carriers have got much better at capacity management in recent years, but it is unlikely this will be enough to prevent freight rates from collapsing.”

See also:

• Container rates rise more than 10% to both coasts, but future may be positive
• Container rates, a new ocean alliance and other supply disruptors ahead for 2025

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