① The Houthis attack on cargo ships in the Red Sea is unlikely to end soon, which forces shipping companies to continue to avoid Red Sea routes; ② The Red Sea crisis is still escalating. In addition to ordinary cargo ships, the Houthis have begun direct attacks on US warships.
AFP, Feb. 1 (Editor: Niu Zhanlin) German shipping giant Hapag-Lloyd recently claimed that the Houthi attacks on cargo ships in the Red Sea are unlikely to end soon, which forces shipping companies to continue to avoid Red Sea routes.
Hapag-Lloyd CEO Rolf Habben Jansen said at a press conference on Wednesday that we don't think the Houthis attacks will end anytime soon. “But you have to ask, how long will it be before it ends? Three or five months, then I don't know.”
Habben Jansen added that a political agreement or armed defense of the cargo ship could bring about a solution within six months. As early as December 15 of last year, after one of the company's cargo ships was attacked, Hapag-Lloyd decided to avoid the Red Sea and chose to bypass the Cape of Good Hope.
He believes it is important for the EU to actively support multinational naval alliances to protect commercial traffic in the region. Choosing a detour to Cape of Good Hope took 2-3 more weeks, resulting in fewer containers being shipped in December than expected.
The company said mitigation measures include buying more containers, but using more vessels to meet demand on time and running these vessels with more fuel will cost customers more.
The day before, Hapag-Lloyd's earnings report showed that profit before interest and tax in 2023 was 2.5 billion euros (about 2.7 billion US dollars), far lower than 17.5 billion euros in 2022. The company said freight rates have dropped drastically as the global supply chain returns to normal after the pandemic.
Maersk also recently said that global shipping disruptions caused by attacks on Red Sea vessels may last at least a few months. Hopefully it will be shorter, but it may also be longer because the development of the situation is so unpredictable.
Conflict escalates
Recently, the Red Sea crisis has been escalating. Apart from ordinary cargo ships, the Houthis have begun direct attacks on US warships, and the US military is also stepping up attacks on Houthi military facilities on land in Yemen. Furthermore, the US has always accused Iran of providing aid to the Houthis. Once the conflict between the Houthis and the US escalates, Iran may become further involved in the conflict.
EU High Representative for Foreign Affairs and Security Policy Borrelli said on Wednesday that it is planned to launch an EU Red Sea escort operation by mid-February. Greek Defense Minister Dendias also said on the same day that Greece will seek the EU's command of the Red Sea escort operation. He also proposed setting the military base in Larissa in central Greece as the command center for the escort operation.
Jefferies shipping analyst Omar Nokta said in a report Monday: “Red Sea diversions are increasing as vessels in the region continue to be attacked, prompting more shipping companies to avoid crossing the region.”
Nokta has vastly raised its views on Israeli shipping company ZIM (ZIM), saying “the script has been reversed” and that the Houthi attacks have turned Estar Shipping's business “from burning money to a cash machine.” In fact, Estar Shipping's stock price has more than doubled since the beginning of December.