Houthis, Iran and Somalia Attack Shipping – What Does It Mean for the Global & National Economies?

Attacks on Shipping!

What’s Going on With Shipping?
Jan. 5, 2024

In this episode, Sal Mercogliano – maritime historian at Campbell University (@campbelledu) and former merchant mariner – discusses the attacks by Iran, the Houthi, and Somalia on shipping in and around the Red Sea, Bab el-Mandeb, Gulf of Aden, Strait of Hormuz and the Arabian Sea.

#redsea #houthi #iran #somalia #prosperityguardian #babelmandeb #shipping #supplychain #attacks #navy #convoys #piracy

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00:00 Introduction

Marine Traffic
www.marinetraffic.com

00:51 1.Houthi, Somali, and Iran Campaigns
Domains of Maritime Circulation

Domains of Maritime Circulation

Ambrey Indian Ocean Threat Circular
https://storymaps.arcgis.com/stories/421fb32ec0be48e088ce3da76e38ee9d

UKMTO Indian Ocean Recent Incidents
https://www.ukmto.org/indian-ocean/recent-incidents#report-D401456F67E14E12AFB695FD5F4696A9

EU Horn of Africa Maritime Security Centre
https://at-sea.mschoa.org/latest-news-bulletins-and-information-of-interest-for-seafarers/

07:06 2. Recent Attacks
Indian Navy on X
Tweets by indiannavy

Indian Navy Commandos Retake Ship In Arabian Sea

Indian Navy Commandos Retake Ship In Arabian Sea

Explosives-Laden Houthi Boat Detonates in Red Sea -US Navy

Explosives-Laden Houthi Boat Detonates in Red Sea -US Navy

Attack on the Saudi Frigate Al Madinah

Houthis Take Aim At French Shipping Giant CMA CGM

Houthis Take Aim At French Shipping Giant CMA CGM

12:18 3. Impact on Suez, Red Sea, and Shipping
IMF Portwatch Suez Canal
https://portwatch.imf.org/pages/c57c79bf612b4372b08a9c6ea9c97ef0

Red Sea activity down nearly 20% after containership exodus
https://www.lloydslist.com/LL1147824/Red-Sea-activity-down-nearly-20-after-containership-exodus

CMA CGM To ‘Gradually Increase’ Red Sea Ship Transits – Maersk Maintains Diversions
https://gcaptain.com/cma-cgm-to-gradually-increase-red-sea-ship-transits-maersk-maintains-diversions/

Charter rates for large boxships jump in response to Red Sea diversions

Charter rates for large boxships jump in response to Red Sea diversions

18:00 4. Container Rates
Container Spot Rates Soar on Red Sea Threats

Container Spot Rates Soar on Red Sea Threats

‘Red hot’ tanker rates arise from Red Sea shipping risks
https://www.lloydslist.com/LL1147737/Red-hot-tanker-rates-arise-from-Red-Sea-shipping-risks

Drewry World Container Index – 04 Jan
https://www.drewry.co.uk/supply-chain-advisors/supply-chain-expertise/world-container-index-assessed-by-drewry

21:18 5. Nations React & Operation Prosperity Guardian
A Joint Statement from the Governments of the United States, Australia, Bahrain, Belgium, Canada, Denmark, Germany, Italy, Japan, Netherlands, New Zealand, Republic of Korea, Singapore, and the United Kingdom
https://www.whitehouse.gov/briefing-room/statements-releases/2024/01/03/a-joint-statement-from-the-governments-of-the-united-states-australia-bahrain-belgium-canada-denmark-germany-italy-japan-netherlands-new-zealand-and-the-united-kingdom/?utm_source=twitter

U.S. Reiterates ‘Defensive Presence’ in Red Sea After Warning

U.S. Reiterates ‘Defensive Presence’ in Red Sea After Warning

NAVCENT Commander Vice Admiral Brad Cooper Holds an Off-Camera, On-The-Record Press Briefing via Teleconference on Operation Prosperity Guardian
https://www.defense.gov/News/Transcripts/Transcript/Article/3631484/navcent-commander-vice-admiral-brad-cooper-holds-an-off-camera-on-the-record-pr/

25:19 Conclusion

On today’s episode of what’s going on with shipping the houthi Iran Somalia are all attacking shipping what does this mean for the global economy I’m your host salmer kagano welcome to today’s episode so we’ve been focusing on this topic a lot but it has massive implications for the global economy

We’re going to break this down talk about what is happening what’s what are the attacks going on including a recent attack against commercial shipping launched from Somalia and foiled by the Indian Navy what does this mean going on long term if you’re just a consumer sitting in the United States in Europe

In Asia Africa South America what does this mean to you and what you’ll find out is there are huge implications about these attacks you’re new to the channel hey take a moment subscribe to the channel and hit the Bell so be alerted about new videos as they come out all

Right let’s put this into some context this map by John Paul rodrig over at used to be at Hoffer and now he’s down at Texas A&M University is a great one to really highlight both commercial shipping routes and the primary and secondary choke points around the world

And what we’re seeing right now is a threat to several primary choke points the Bob Elman dab which is the entrance to the Red Sea and the um Gul of uh Aiden this is the connector that allows ships to head up to the Suez Canal coming out of The Straits of Hormuz

We’ve seen a series of attacks by Iran again shipping two in particular and now with this closure or partial closure I should say we’re going to clarify what’s going on exactly through this region we’re seeing a lot of ships now diverting down heading down to South Africa coming along the coast of East

Africa here through the mosm Beque Channel and now we’re having attacks by Somali out here in this region so we got three specific regions that are being targeted all of that does not bode well hop over to Marine Traffic this is the live marine traffic map of the world

You’ll see that density of shipping that we talk about here coming out of The Straits of Mala the green represent cargo ships so these are container ships and bulkers heading this way red a lot of red is tankers heading up into and around the Persian Gulf and notice we

Still have a lot of traffic going in through the Bob elmb the Red Sea and the Gulf of Aiden and yes someone asked me the other day the drinking game is still on every time I mentioned Bob Elman dab and you’re going to get pretty hammered if you’re watching this episode zoom in

Here just a little bit and take a look at this region you can see the density of ships however what we’re starting to see here is it’s starting to slacken and that’s going to have some big impact if you clean this up and you just have container ships containerships over

4,000 teus te is a 20 foot equivalent unit that’s a 20 foot box most containers are actually 40-footers feus twice a equal to two teus you’ll notice that there are not as many ships going through here you’ve got a few coming in teemon which is being used by o a

Japanese line CMA CGM orario uh CMA CGM is still running ships through here we’re going to talk about that in a second you’ll see some other ships coming here some Chinese vessels coming in uh and then some vessels turning around the Italians just ran two vessels through the two jollies came through and

Then you’ll see the MK vessels all turning around and heading out so the big diversion you’re seeing right now through this region are containerships and that’s largely due to the cost associated with them container ships tend to have the most valuable cargo on board which means that the insurance

Rates tend to be the highest and that is a very big economic Dole out by the shipping companies and what they have done is basically rerouted and move their ships around if you zoom out here and you look at where those 4,000 te EU container ships are going you see them

All heading in around this region right here this is the the diversion that we’re seeing taking place if you want to follow this in real time and get some of the best information one of the things I love to do is provide people with good sources to go through couple of ones

This is Ambry Ambry is a maritime security uh group they do a lot of threat Assessments in and around they’re doing a threat circular right now for the Indian ocean region so you can follow in you can get a quick executive summary a situation report a threat update and probably the most interesting

One for me is a timeline of attacks going all the way back to Galaxy leader in November you can follow along with this incident map that shows you exactly where ships are being attacked in this region and then of course mitigation and they have the ability here to give you

Some further analysis a lot of shipping firms would pay a AMR to give them some analysis so to make better decisions basically a Consulting you also have the UK Maritime uh uh trade office they record and monitor all threats that are out there and you can basically follow along track every

Threat here red shows you attacks hijackings incidents or kidnappings the orange here or robberies or boarding so the most recent boardings were out here in the Arabian Sea you can see some advisories and then some notices so another good source to find and then a great detailed breakdown actually comes

From the European uh unions Naval forces operation at uh not uh Atalanta I think I said that right it’s not Atlanta I keep wanting to say Atlanta it’s Atalanta this is their anti-piracy patrol but they do updates this is the January uh 3rd update where they provide

You a great breakdown on the list of ships that have been attacked a little bit more detailed than what you saw from Ambry interestingly enough I sent a request of information over to Central Command because every time Central Command posts a notice on Twitter they’ll note that this is the 24th

Attack on ships and I asked them to break down those 24 attacks what what tax are they talking about because I can’t really put it together with what they released and the note I got back one was they didn’t understand the initial request and then the second one

Says they couldn’t fulfill it because they can’t give away their intelligence gathering I not asking about intelligence gathering I’m asking about how they broke down the list anyway this is from the European Union a really good source they also have a great breakdown here on the map of where all these

Incidents took place so if you want to see where the attacks are happening all broken down here for you and then you can go through them M but they’ll have the last cases so for example The Last Ship that was attacked on 2nd January

Was the CMA CG uh CGM uh Tage and so they have that discussion on here along with an assessment and recommendations really good source for information and I’ll have all those links in the show notes so that video I had in the beginning of this was filmed by the

Indian Navy and this was the retaking of a vessel that had been pirated off the coast of Somalia this is motor vessel Layla norfol it was a bulk carrier heading up from South Africa up toward the Persian Gulf and there was a report put out by the UK Mt office saying that

There was suspected boarding of the ship the crew on board got into What’s called the safe room now this is the second or excuse me third time we’ve seen this happen the first time was a tanker by the name of the Central Park that was boarded and in that case the crew was

Able to lock themselves in the safe room disable the ship and a crew from the USS Mason a Arley Burke class destroyer arrived on scene to assist the second time was a Bulgarian owned maltes flag uh bulker by the name of Ruan the Ruan was taken and that vessel

Was sailed to the coast of Somalia it was off there as of Christmas uh it has since gone dark on its AIS however it was caught on satellite recently pretty close to this area which makes one think that maybe the rwan is acting as a mother ship this is about 500 miles east

Of Somalia this is far off for small boats The Vessel was taken by the Indian Navy now the Indian Navy has reacted very strongly after a series of attacks against ships in and around the Arabian Sea launched by Iran and this has sent the Indian Navy out of their ports and

Operating extremely far out and in this case there was a large contingent of Indian crew member on board this ship says Costco shipping on the side it’s no longer with Costco I made that mistake uh Costco shipping is the Chinese overseas shipping company this ship was

Sold to Leela and is being operated by that company company but the crew got on board from the Indian Navy destroyer they have found that the Pirates have left the vessel and therefore they were able to retake the vessel and free the crew so this is part again of of a

Larger attacks we’re seeing the Iranians had initially attacked two vessels out in the Arabian Sea early on the CMA CGM uh Simi that ship was hit by an attack from an Iranian drone and then most recently a tanker the chem Pluto this has led the Indian Navy to set sail now

We have the Indians retaking this vessel off the coast of Somalia now this gota be careful about this the last case of a of Somali piracy is back in 2017 now we’ve had some recent attacks against fishing vessels off the coast but seizure vessels large oceangoing vessels

You got to go back to 2017 I’ve made the argument that this is not traditional Somali piracy of the 2000s 2010s this is not seizing Maris Alabama and Captain Phillips and wanting to hold them hostage for ransom this is Somali acting in concert with houthis and Yemen in

Support of what is happening in Gaza to the Palestinians and in conjunction with Hamas that’s what this seems to be we know this because Ruan the capture of Ruan has not led to a ransom request you would see a ransom request there has not been a ransom request instead this seems

To be another element of attacking of ships and the style of attacking of ships has also changed too this story which comes out of a press conference given by vice admiral Brad Cooper the commander of the US fifth Fleet and combined Maritime forces talked about the use for the first time recently of

An explosive Laden houthi boat uh this boat did not come close to a ship and instead detonated out there there were some inaccurate reporting that this is the first time we’ve seen the houthi use this uh that’s not true at all this is a 2017 attack on a Saudi frigate in the

Red Sea The Vessel you see coming in off the port quarter there is a houy drone boat they basically modified a small skiff to be remote controlled and packed it full of explosives and they ran it into the stern of the Saudi frigate here and this is the explosion you see this

Is from above the flight deck looking at the helicopter on the stern where it was hit uh this is a modification of what we saw happen to the USS Cole back in Aiden in 2000 so you have Iran attacking ships up in the Arabian Sea launching drones

Hitting them two vessels we’ve saw the attempted seizure of three vessels by the Somali uh one was successful to have been now foiled defeated and then this the most recent attack was by the houthi against a ship of CMA CGM this is the French Line This is a ship called the T

Which was attacked while heading Northbound through the region uh CMA CGM very unique here we’re going to come back and talk about them in a sec all right let’s talk about impact this is having this is from the international monetary fund this is their port watch

Site and they have a port monitor that tracks vessels this is doing the Suz canal tracking right here so you can see the annual vessel composition going through the Suz Canal about 10% General cargo about 30% tankers 30% containers about 26% uh dry bulk and then about 5%

Roll on rolloff cargo and what we’re seeing right now is a decline this is the data from 4 October all the way to 4 January and what we’re seeing is a decline of about one4 to 1/5 the number of vessels that are going through the Suez Canal uh that’s a significant drop

Let’s be clear that’s a lot of vessels going through and the significant ones we’re seeing are in the container market and then some tankers principally liquefied natural gas carriers not going through Dry bulkers the majority of tankers still going through we’ve seen some diversions of roll on rolloff ships

But a sizable chunk this means that the Egyptians for example are losing a lot of money because an average toll through the Su Canal is about a half a million dollars and so this is having an economic significance on obviously Egypt but there’s also means that if ships are

Not going through this region they’ve got to go the longer route around that’s 3,500 miles around Africa that is significantly adding to the cost of voyages Bridget dykin award-winning uh journalist over at Lloyd’s list has this great story out Red Sea activity down nearly 20% after containership EX exus

That kind of jives with the the factors we just had here and if you look at the number of distinct cargo carrying vessels active in the Red Sea what you see here is from November of 2023 that drop principally once the hthy announced that they were going

To start targeting really any ship that they could connect to Israel and you can see that drop right there and it’s a very significant drop coming off broken down even further in terms of numbers this is the numbers for 2023 and for weeks 49 50 uh 51 and 52 so 52 is the

Last week of the year in Gray you can see a slight drop there in bul carriers slight drop in in product carriers crude oils remaining basically the same but it’s in container ships that you see it dropping same thing in general cargo ships and vehicle carriers so that’s

Where we’re seeing the drop in vessels going through that’s who’s diverting what is interesting is that while marisk has announced their decision to return you know reroute their vessels a second time remember marisk was the first company that said we’re not going to go through the Red

Sea on December 15th and then on December 24th they sat there and said well we’re going to start going back through again and then they had the attack on meis hunga that has convinced meis not to go through there the problem is marisk and Mediterranean shipping company which are in an alliance

Together have connections to Israel the uh the the wife of the owner of MSC has Israeli citizenship along with Swiss citizenship marisk has a lot of ships that visit Israel they’re in an alliance semi alliance with Zim the Israeli State shipping firm but company like CMA CGM

Which is a French line is still driving ships through even though the Taz just got attacked they just ran through two of the largest container ships in the world these two massive 23,000 te uh ultra-large container vessels so CMA GM which has a French frigate in the area is obviously providing dedicated escorts

To run these vessels through so we’re seeing cmacgm keeping up their Transit but nearly everybody else with the exception of uh one or two ships going for Costco or o and a few of the smaller companies almost everyone has diverted around this makes everything expensive I

Had somebody sent me a note uh the other day and say well listen I’ve heard an estimate that this is costing half a billion dollars a day and this is that’s an insane number there’s no way it’s costing that and I very quickly took 400 ships added up fuel costs based on

Burning between 50 and 100 tons of fuel a day and diverting 10 days one way so a 20-day round trip and I came to a cost of almost half a billion dollars so this is going to cost a billions of dollars in diversion right here but one of the

Things that’s also adding is the charter rate for ships not the cost of the boxes this is to CH Charter the ship and this story over in container news talks specifically about this so there’s a group of charterers out there called noos These are non-owner operators these are companies basically like a U-Haul

Where they just Charter out their ships and those rates are going up liner litica which is an analytic firm estimates that the rates for an 8,000 te ship are now around 35,800 a day that’s up 45 % since 2019 and a 6,500 Tu ship up 25,500 a day

That’s up 29% and what we’re seeing is because of these longer routes shipping firms either have to load more cargo on their ships or get more ships and what they tend to do is go to these noos kind of like you would need like you see in

The in in the holiday season when delivery companies are coming to your house or your business in rental trucks that’s what these guys are doing they’re renting basically ships and that is driving up the cost then you have the cost to ship the boxes over these longer

Routes and what we’re seeing is reports that Freight rates are increasing this story over in gap container spot rates sore on Red Sea threats this is a Bloomberg story spot rates for shipping Goods in a 40-foot container from Asia to Northern Europe now top $4,000 a 173%

Jump now let’s be clear about some most cargo moves on long-term charters on spot Charters about 70% and so those rates are lower than what you’re seeing on the spot market right now however rates just got renegotiated January 1 going into effect for the Europe to Asia

Route so we’re not exactly sure of those rates are going to hold based on this uh we’re also seeing not just containers but also seeing the tankers hit the same thing with the diversion of some tankers not a lot but some this is causing a much longer route so we’re seeing tanker

Rates increase but to look at containers this is the report from Drury again another analytic firm that puts out this kind of data on this this is their world container index and I showed Fredo’s index the other day this is drury’s and what you see here is that rate go up uh

From January of 2023 it was uh right here at about $2,132 if you go to the very beginning of this event in October when uh Israel and uh Hamas and Gaza all blew up the rate was right around $1,390 now you see it topping $2,670 now this is a world Composite

Index uh it takes all the routes and generates an index here but if you come down to this chart which looks at basically more significant more broken down routes a couple of key ones Stand Out Shanghai to Rotterdam that’s up 115 % over this past week if you look at

Shanghai to Los Angeles the transpacific which shouldn’t really be affected by this is up 30% and then the Shanghai to New York is up 26% and then we’re starting to see the rate from Europe because one of the things that’s Mis there’s a misconception here is two of the big

Ocean alliances the alliance and the ocean Alliance basically announced before this all took place with Israel and Hamas that they were going to shift most of their containers coming from Asia to the east coast of the us through the Suez Canal why because of the low water

Levels on the Panama Canal and because of low water on the Panama Canal and the fact that uh transits were being decrease by oneir and you couldn’t fully load neop panamax containerships these are the big containers ships that go through the new Lane they decided to put

A lot of their boxes heading to the east coast of the US heading through Suez and and what they’re doing is they’re putting those boxes on the big ultra-large container vessels they bring them to Big terminals in Europe transload them onto smaller vessels and then run them across the Atlantic and

What you’re seeing here is that Roder Dam to New York raid is starting to climb 2% I will expect to see that rate climb even further lastly there was a press conference held by vice admiral Brad Cooper uh Admiral Cooper is the commander of the US fifth Fleet that is

The naval forces in and around uh the Middle East it’s under us Central Command based in Bahrain he’s also concurrently the commander of the combined Maritime forces combined Maritime forces overseas CTF 153 this was the organ organization stood up last year to oversee the Red Sea the Gulf of

Aiden and the bab El mandab they are overseeing operation Prosperity Guardian so he gave a press conference which was not on camera but for the record that broke down a lot of these issues I’ll have the link to it and you can go through it there was a lot of questions

Asked of him about it there’s also a good summation by Mike Schuler over a g captain that talked about it but a couple of the key things that came out that really struck me about this is number one is he talked about how operation Prosperity Guardian guarding

This region here in and around the Persian Gulf was Defensive in nature he wanted to clarify because a recent statement that came out from the United States and several allies really laid out to the houthi that that we were done that you have this last moment to really

Think about what you’re doing and that statement was a really interesting statement this is the joint statement put out by the governments of the US Australia Bahrain Belgium Canada Denmark Germany Italy Japan Netherlands New Zealand Korea Singapore and the United Kingdom significantly missing from this obviously or countries like China which

You expect not to be in a joint uh press release from the United States but interestingly enough you’re also missing France for example which is a member of operation Prosperity Guardian uh you also uh don’t see some other key countries in here but this statement was really unique because it really laid out

To the houy that the US and its countries were were getting tired of it what I found the most interesting was this these attacks threaten innocent lives from all over the world and constitute a significant International problem that demands Collective action nearly 15% of the global Seaborn trade

Passed through the Red Sea including 8% of global grain trade 12% of Seaborn traded oil and 8% of the world’s liquefied natural gas trade okay you’re basically telling the houthi you’re being successful this is what you’re doing you’re successfully interdicting this I I don’t think this is the the

Message you wanted to to spread but it’s the message they did spread but the statement by Admiral Cooper was a lot different because he was talking about operation Prosperity Guardian this this very defensive action he talked about what the naval forces had been able to do uh the fact that 15,000 ships have

Been able to get through this region uh without uh issues uh excuse me 1500 ships were able to get through the area without problems since the Inception of the operation on December 18 talked about the number of missiles they’ve intercepted and drones which isn’t the total amount it’s just since the

Beginning of the operation uh the fact that no vessels has been hit since the Inception there was a lot of conflicting information about ships being hit but U Admiral Cooper was adamant that no ship had been hit since the beginning of this but the thing that struck me the most

About this was he was doing it with five ships that is a substantially small number of ships and he didn’t break down what whose vessels they were but five ships to screen an area of several hundred miles is is a problem because what they’re doing is basically being

Extremely defensive he used the area he used the the anal of a zone defense in in sports that they’re not playing one-on-one manto man although I would argue they are in some cases I think the French for example are detaching their ship the uh the frigate they have in the

Area to escort through the CMA CGM ships so there’s a lot still to be learned about this operation but the issue I think that really stands out is that both the houthi Somalia and Iran are effectively targeting global Shipping in creating a global economic problem this

Is going to cost billions of dollars the fact that I get a note from somebody in the Navy who doesn’t quite understand that tells me a lot about the fact that the Navy focuses on the military which I expect them to do they don’t understand the commercial aspect and the commercial

Aspect here is that Iran Somalia and houthis are being extremely effective in disrupting Now understand this the root of all this goes back to Israel and Hamas and Gaza that’s the root of this and you know a lot of people will tell me that if you fix that you fix this I’m

Not 100% sure about that because Iran has been doing this long before that but the most recent attacks by the houthi and Yemen and by The somalis Who are I think allied with the houy these attacks are really significant and they seem to be expanding there are two separate

Operations going on there’s the anti-piracy operation CTF 151 operation Atalanta out in the Arabian Sea uh trying to stop the Somali piracy aspect and then operation Prosperity Guardian protecting the vessels going up remember this can change overnight we haven’t seen the use of mines for example which

Would be catastrophic in this region we haven’t seen hit ships get physically hit and damaged to a level where fire and and crew death becomes an issue let’s not forget there is a crew being held hostage right now they’re not guests of the houthi they’re hostages the Galaxy leader has been held since

November this is a major attack against global Shipping and you’re going to feel it in your pockets I guarantee you that you’re going to see inflation you’re going to see higher Freight rates you’re going to see higher costs this is a significant issue and it’s not just a

Monetary issue this is going to impact everything across the board and when container lines decide to bypass this region it has impact this is a crucial issue that we’re not talking about enough because I think we’re underrating this this is much more significant than the everg given when it went sideways in

The Suez back in 2021 when this channel started and it is cropping up there with the global supply chain crisis it’s not there yet but understand these disruptions are going to be felt globally and we’re going to start seeing the the secondary and tertiary effects

Of it as it goes I hope you enjoyed today’s episode a long episode but there’s a lot to discuss in this issue if you haven’t yet subscribe to the channel and hit the Bell so to be alerted about new videos as they come out give it a thumbs up share it across

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This s signing off