Cargo vessels are avoiding the Red Sea after Houthi rebels started attacking commercial ships off the Yemen coast. Since mid-November, the rebel group has attacked ships in protest of Israel’s escalating response against Hamas in the Gaza Strip. The attacks threaten to disrupt supply chains as the Red Sea is a critical shipping route leading into the Suez Canal. Ships avoiding the Red Sea must now travel around Africa’s Cape of Good Hope.

How Does Avoiding the Red Sea Impact Shipping?

The Suez Canal connects Europe to Asia and India by creating a waterway that connects the Mediterranean and the Red Sea along the coast of Egypt. This allows ships to avoid sailing around Africa to travel from Europe to Asia, which is a much longer and more expensive journey.

By avoiding going through the Red Sea/Suez Canal, ships can add 1-2 additional weeks of travel time, increasing the overall cost of shipping goods as a result. Rerouting around the Cape of Good Hope can reduce a trip’s effective capacity by 25%. While oil prices have only slightly elevated, a prolonged disruption in the shipping route could cause costs to rise as 12% of global trade goes through the canal. About $10 billion of trade per day was impacted in 2021 when a container ship blocked the canal for six days.

Companies Impacted So Far

As of December 19^th, the following companies have announced they are avoiding the southern Red Sea. Some have announced that they’re facing shipping delays of up to 2 weeks due to rerouting ships.