As the Israeli-Palestinian conflict intensifies, tensions in and around the Red Sea are also rising.

Recently, Yemen's Houthi armed forces began to frequently attack commercial vessels in the Red Sea, and caused substantial damage to some commercial vessels. In order to avoid risk, more and more shipping companies announced the suspension of all container ships in the Red Sea and nearby waters, or avoid the Red Sea by detour to the Cape of Good Hope in Africa.

It is worth mentioning that the Panama Canal, another important shipping route in the world, has also been forced to decline significantly in recent months because of drought.

The two major canals suddenly "suffered", at the time of Christmas in the West, not only the Western economy and trade impact, and even the global supply chain may be affected.

This is reminiscent of the "Suez Canal blocking incident" in March 2021, which, under the combined catalysis of a series of subsequent factors, eventually triggered a "butterfly effect" sweeping the global inflation crisis.

This time, the two major shipping choke points are blocked, will not trigger a new global supply chain crisis, it is also worth watching.

Red Sea shipping crisis

Suez Canal-Red Sea route, guarding the traffic arteries of Asia, Africa and Europe, connecting the Red Sea and the Mediterranean Sea, is one of the busiest waterways in the world.

About 12% of global trade, including 30% of global container trade and about 10% of crude oil and 12% of refined oil products trade, is transported through the Suez Canal and then flows through the Red Sea and the Bab el-Mandeb Strait.

The Bab El-Mandeb Strait, located between the Horn of Africa and the Middle East, connects the Red Sea with the Gulf of Aden and the Arabian Sea, which empties into the Indian Ocean.

Therefore, for long-distance freight ships to take the Suez Canal route, only 20 kilometers wide Bab el-Mandeb Strait is the only way.

But as the Israeli-Palestinian conflict continues, Houthi attacks have caused a number of "ship owners" to press the pause button in the Red Sea.

Since the outbreak of the new round of Israeli-Palestinian conflict, Yemen's Houthi armed forces have repeatedly claimed to launch attacks on targets in Israel, and Houthi armed forces have repeatedly attacked targets in the Red Sea waters with missiles and drones.

Since mid-November, Yemen's Houthi armed forces have even issued a statement saying that they will expand naval strikes against Israel and prevent all ships heading to Israeli ports from sailing in the Arabian Sea and the Red Sea. Any ship flying the Israeli flag, operated by Israeli companies or owned by Israeli companies will be targeted.

On November 19, the Houthis announced that they had detained the Israeli cargo ship "Galactic Leader" in the waters of the Red Sea. In early December, the Houthis confirmed missile and drone attacks on the merchant ships "Unity Explorer" and "Ninth" sailing in the Bab el-Mandab Strait.

On December 11, the group launched a missile attack on a Norwegian-flagged oil tanker that it said was carrying "oil destined for Israel."

As the situation intensified, more and more merchant ships began to be affected.

On the 14th, the Houthis claimed to have launched a drone attack on a container ship owned by Maersk, the world's second largest container shipping company, but fortunately the ship was not hit.

It is reported that Maersk's trade volume accounts for 14.8% of the world's freighters.

This was followed by an attack on the container ship MSC PALATIUM III of the world's largest shipping company, MSC, while crossing the Red Sea on Friday. Then a very large container ship owned by Hapag-Lloyd was struck by a drone or missile as it passed through the southern Red Sea, setting the deck on fire and sending a container overboard.

Houthi spokesman Mohammed Abdeslam reiterated on the 16th that the Houthis will continue to block the navigation of "Israeli ships" in the Red Sea and the Arabian Sea until Israel stops its military operations against the Gaza Strip.

As a result, the four major shipping companies, including International Hapa-Lloyd of Germany, Maersk Line of Denmark, Mediterranean Shipping Company and CMA CGM of France, have begun to announce that their freighters temporarily avoid the Suez Canal route that needs to pass through the Red Sea to ensure the safety of their crews, ships and customers' cargo.

As for the resumption of the route, at least after the 18th, as for when the real resumption of flights, until the Red Sea route is confirmed to be safe until.

These four giants have a total share of 40% in the global Marine market!

This has led to a significant decline in commercial traffic on the Suez-Red Sea route.

According to data released by the Panama Canal Authority (ACP), with the increased probability of attacks on ships in the Red Sea, which may cause 30% of the container fleet to need to divert, the number of ships passing through the canal in November is 783, down 22% from October, and it is expected that the booked traffic will further decrease in December and January 2024.

But at the same time, freight prices have soared.

Because merchant ships have to avoid the Red Sea and bypass the Horn of Good Hope in Africa, not only will the time increase by at least 10 more days, but the fuel cost will increase by more than 40% alone.

In fact, since the outbreak of the Israeli-Palestinian conflict, the freight rates for a large number of goods arriving in Israel from eastern Asia have continued to rise.

Container freight rates from China to Ashdod rose 9% to 14% in the last two weeks of October, according to Freightos, and the increase even accelerated in November.

On December 15, the freight rate of Shanghai port exports to the European basic port market was 1029 US dollars /TEU, up 11.2% from the previous period; The freight rate to the Mediterranean basic port market was $1,569 /TEU, up 13.1% from the previous period.

In particular, the price of booking on the Red Sea route rose more sharply, and the Red Sea route index of the Ningbo Export Container Freight Index (NCFI) surged 27.7% from the previous week to 1393.71 points.

Some agencies estimate that as a result of the Houthi armed attack, shipping freight to and from Europe may rise by as much as 100%.

Although this magnitude and the March 2021 "Suez Canal blockade incident" caused by the surge in freight prices, but given the current situation, the next period of freight prices will be a high probability of the event.