U.S., Canada to join multi-national operation to counter attacks on commercial ships in Red Sea

U.S. Defence Secretary Lloyd Austin on Tuesday announced the creation of a multinational operation to safeguard commerce in the Red Sea following a series of missile and drone attacks by Yemen’s Iran-aligned Houthis.

Austin, who is on a trip to Bahrain, home to the U.S. Navy’s headquarters in the Middle East, said participating countries include the United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain. He said they would conduct joint patrols in the southern Red Sea and the Gulf of Aden.

“This is an international challenge that demands collective action,” Austin said in a statement early on Tuesday.

“Therefore today I am announcing the establishment of Operation Prosperity Guardian, an important new multinational security initiative.”

Mounting attacks by the Houthi militant group on ships in the Red Sea are disrupting maritime trade and prompting U.S. efforts to build a coalition to deal with the threat, as freight firms reroute around the Cape of Good Hope to avoid the Suez Canal.

A military spokesperson for the group said it launched a drone attack on two cargo vessels in the area on Monday, the Norwegian-owned M/V Swan Atlantic and the MSC Clara. 

These were the latest in a series of missile and drone strikes on shipping which it says are a response to Israel’s assault on the Gaza Strip.

Norway said it was ready to provide up to 10 naval officers to the task force. Italy said it was considering joining, while Denmark’s Defence Minister Troels Lund Paulsen said Copenhagen would “participate” in helping to provide security, without elaborating.

Oystein Elgan, chief executive of the Swan Atlantic’s owner Inventor Chemical Tankers, told Reuters the ship’s water tank had been damaged in the attack but all the vessel’s systems were operating normally. None of its crew had been injured.

Inventor Chemical Tankers has no ties to Israel, Elgan said. A U.S. Navy destroyer responded to the ship’s distress calls by moving toward the ship, U.S. officials said.

Operator Uni-Tankers said in a statement the crew had brought under control a small fire after the vessel was struck on its port side. The ship was carrying vegetable oils and is sailing to Reunion Island.

The attacks — combined with a drought impacting ship crossings through the Panama Canal — will “add to the price of energy, it’s going to add to inflation, it’s going to create wider military and international tensions,” said Radhika Desai, a professor in the political science faculty at the University of Manitoba.

She said the disruptions to trade will likely last as long as Israel continues its bombardment of Gaza.

‘Deteriorating security situation’

Taiwanese container shipping line Evergreen said on Monday that it has decided to temporarily stop accepting Israeli cargo with immediate effect and instructed its container ships to suspend navigation through the Red Sea until further notice.

Meanwhile, oil and gas giant BP also paused transit through the area. Shipping giants MSC, Hapag-Lloyd, CMA CGM and Maersk had done so earlier, according to a CNBC report.

“In light of the deteriorating security situation for shipping in the Red Sea, BP has decided to temporarily pause all transits through the Red Sea,” the company said in a statement shared with CBC News. “We will keep this precautionary pause under ongoing review, subject to circumstances as they evolve in the region.”

WATCH | Houthi attacks show solidarity with Palestinians:

Houthi militias attacking ships in the Red Sea

Yemen’s Houthi militias have been attacking commercial ships in the Red Sea, claiming they’re acting in solidarity with Palestinians and that all of the targets have some connection to Israel. Now, the U.S. is calling for a coalition to protect vessels.

Norwegian energy group Equinor said on Monday it had rerouted “a few ships” carrying crude oil and liquefied petroleum gas (LPG) away from the Red Sea. The company declined to say how many vessels were affected.

The Suez Canal shipping route, which leads to the Red Sea, is a vital waterway for global trade, used to transport energy and other goods between Europe and Asia, and elsewhere. The route saves on time and expense by avoiding navigating around the entire Africa continent.

Several major freight companies — including MSC — have begun to sail around Africa instead, adding costs and delays that are expected to be compounded over the coming weeks, according to industry analysts.

Meanwhile, a blog post published on Maersk’s corporate website Monday said the company would officially impose a surcharge on all cargo discharged at Israeli terminals starting Jan. 8.

“War risk insurance premiums are on the rise naturally, but as vessels gets rerouted around Africa shipping supply will be tighter as cargoes travel longer,” Frontline CEO Lars Barstad told Reuters. “That would put rates under a strong upwards pressure.”

Companies with diverted vessels control half of market

The Red Sea attacks have showed the ability of Middle Eastern paramilitary forces backed by Iran to upset global trade at a time when Tehran and its proxies are positioning themselves against the United States and Israel.

Combined, the companies that have diverted vessels “control around half of the global container shipping market,” ABN Amro analyst Albert Jan Swart told Reuters.

Attacks have occurred in the Bab el-Mandeb Strait, the southern outlet of the Red Sea, between Yemen on the Arabian Peninsula and Djibouti and Eritrea on the African coast. The Bahamas-flagged Galaxy Leader, meanwhile, was seized by Houthis last month.

Two armed men are shown on the platform of a ship as a helicopter flies overhead.
An image from handout footage reportedly shows members of the rebel group during the capture of the Galaxy Leader ship. The Houthis say they are targeting any ship that is either going to Israel, or has Israeli connections. (Houthi Media Center/The Associated Press)

The Houthis said on Saturday that real steps to ease the humanitarian crisis in the Gaza Strip would contribute to “reducing the escalation.” They also said that they were in Oman-mediated talks about its sea “operations.”

That was the first indication that the militia group may be willing to de-escalate.

Shipping costs rising

About 10 to 15 per cent of world shipping traffic goes through the Suez Canal, the shortest maritime route between Europe and Asia.

The shipping diversions could result in significantly slower shipments and potentially higher prices for consumers.

Rico Luman, an analyst at ING, said at least a week of sailing time would be added for container liners. Typically, shipping goods from Shanghai to Rotterdam takes around 27 days via the Suez Canal.

“This will at least lead to delays in late December, with knock-on effects in January and probably February as the next round will also be delayed,” Luman said.

Zvi Schreiber, CEO of global freight platform Freightos, told Reuters “it is unlikely that rates will spike to levels experienced during the pandemic” as a result of the current problems in the Red Sea.

“Shippers could expect longer lead times due to longer voyages, but operations should continue reasonably well,” he said.

Marco Forgione, director general at the Institute of Export and International Trade, was less sanguine, saying the attacks are occurring during a critical time in the buildup to the Chinese New Year.

“Container rates are going to go up, the cost of insurance is going to go up, all of this has an impact on the price point for the consumer,” he said.

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