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A French Navy warship escorts a CMA CGM containership in the Red Sea. Photo courtesy French Forces

FILE PHOTO: A French Navy warship escorts a CMA CGM containership in the Red Sea. Photo courtesy French Forces

U.S. Intelligence Report Reveals Effects of Houthi Attacks on International Trade

Mike Schuler
Total Views: 2981
June 13, 2024

A new report from the Defense Intelligence Agency (DIA) highlights the disruptive impact of Houthi attacks on international trade.

The report, titled “Yemen: Houthi Attacks Placing Pressure on International Trade,” comes as the Iranian-backed Houthi forces have carried out numerous attacks on commercial shipping in the south Red Sea and Gulf of Aden since November 2023, endangering civilian crews and jeopardizing a crucial global trade route. The group has ignored calls from the United Nations and other international entities to cease their maritime aggression.

The Houthis, non-state actors based in Yemen, have enhanced their military prowess with Iranian aid since 2015. Attacks have targeted ships en route to Israeli ports and those linked with the United States and its allies, compromising regional security, hindering international humanitarian efforts, and straining on global maritime trade.

According to the DIA, Houthi attacks are responsible for a significant drop in container shipping through the Red Sea, with a 90% decrease since December 2023, affecting 10-15% of global maritime trade.

The consequences of the Houthi attacks have been widespread, affecting at least 65 countries, as well as 29 different energy and shipping firms.

The report also highlights the additional costs for alternate shipping routes around Africa, including increased transit time, additional fuel costs, and increased insurance premiums. According to the report, alternate shipping routes around Africa, despite adding about 11,000 nautical miles, approximately $1 million in fuel costs per voyage, and 1-2 weeks of transit time, can be less expensive than the combined costs of crew bonuses, war risk insurance, and Suez transit fees.

Insurance premiums for Red Sea transits have increased to 0.7-1.0% of a ship’s total value as of mid-February, up from less than 0.1% before December 2023.

Humanitarian relief for Sudan and Yemen is also experiencing delays and increased costs due to longer routes around Africa.

The report was released as part of the DIA’s ongoing efforts to enhance public understanding of its mission and offer insights into Department of Defense and national security issues.

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