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The Logistics Report is taking a break for the holidays between
Dec. 25 and Jan. 1. Look for us back in your inbox Jan. 2, and in the
meantime check our website for any breaking news.
The shipping world is heading into a new year with the standoff in the Red Sea that has upended global trade no
closer to ending than it was at the start of 2024. Despite hundreds of
American and allied strikes and the deployment of a U.S. Navy flotilla,
Yemen’s Iran-backed Houthi rebels have kept up attacks on commercial
ships passing through the vital waterway.
The WSJ’s Carrie Keller-Lynn, Benoit Faucon and Saleh al-Batati report that Red Sea trade routes remain paralyzed, with the U.S.-designated terrorist organization causing billions of dollars in losses and
forcing ocean carriers to reroute cargo or run a gantlet of missiles
and drones. The attacks are continuing even though other Iranian-backed
groups have all stopped fighting.
The effective blockade has provided a financial windfall for container
lines, as longer Europe-Asia routes around Africa have swallowed up
capacity and driven up freight rates.
Industry consultant John D. McCown estimates container lines earned a
combined $26.8 billion in profits in the third quarter, up nearly 900%
from last year’s third quarter. In a recent report, Freightos said “Red Sea diversions are still the biggest contributor to rates that remain at least double their level a year ago.”
Carriers have adjusted their operations for the long-haul, and the
increasingly sophisticated and well-armed Houthis show no signs of
losing fighting power. Says one expert, they “don’t have a lot to lose.
They cannot be deterred.”
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