Impact of the Israel-Hamas war on shipping in the Red Sea - statistics & facts
As a result of the Israel-Hamas war, global trade has been impacted heavily, no less so than seaborne trade. This should come as no surprise, as between 22 and 23 percent of maritime-traded goods between non-neighboring countries pass through the Red Sea, specifically through the chokepoints of Bab-el-Mandeb and the Suez Canal, so disruption from conflict was always a likely occurrence. This conflict, compounded with global container freight rates reaching a record high, will be making analysts and businesses operating in the region consider how long this conflict will last and, whatever the outcome may be, will the Red Sea region still be a viable trade route in the future?
Disclaimer:
It must be stated that in the case of wars and other conflicts, objective data collection is almost impossible, and reports relating to the region are largely based on estimates. At the same time, it needs to be noted that some parties involved in the conflict may use numbers and data selectively for their own agenda.
The events in the Red Sea
An estimated 80 percent of goods traded globally are transported via sea routes, with the Red Sea providing a crucial trade route used by vessels from across the globe. For example, the port of Dubai had the largest container throughput in the MENA area in 2022, highlighting the region's importance on global maritime trade. As a response to the Israeli invasion of Gaza, Houthi rebels in Yemen—likely with Iran's backing—started attacking ships sailing through the Red Sea region, making an already treacherous route borderline impassable, forcing some of the world's largest shipping companies, such as Hapag Lloyd, to stop using the Suez Canal as a shipping route. As a result of these attacks, global trade has been extensively disrupted, particularly oil exports in the Red Sea region, which has experienced severe fluctuations since the outbreak of violence. In fact, on more than one occasion, no oil exports passed through the trade route.Is there a solution?
As a result of the conflict, ships have been changing their destinations to either warn that armed guards are (arguably) on board or that they have no affiliation with Israel to protect their vessels from attack. Despite the number of ships making such statements, vessels are still at serious risk of attack. Another solution for vessels is to ship goods via the Cape of Good Hope rather than the Red Sea. However, despite the relative safety of this route compared to the Red Sea, it is considerably longer and more expensive, with an extra 3,500 nautical miles and approximately 1.6 million pounds sterling in fuel and extra costs. This may not be a viable solution for even the leading freight forwarders. Whatever the outcome of the Israel-Hamas conflict, to protect some of the world's most vital trade, it is important that a workable solution is found, and soon.Disclaimer:
It must be stated that in the case of wars and other conflicts, objective data collection is almost impossible, and reports relating to the region are largely based on estimates. At the same time, it needs to be noted that some parties involved in the conflict may use numbers and data selectively for their own agenda.
