Shipping Companies Doubtful of Biden’s Alliance in the Red Sea

Shipping industry insiders expressed uncertainty about the effectiveness of the Biden administration’s newly unveiled multinational initiative, Operation Prosperity Guardian, aimed at safeguarding Red Sea shipping from potential terrorist attacks by Iran-backed Houthi militants in Yemen.

Many cargo operations remain hesitant to resume activities in the Red Sea. Some choose alternative routes, such as circumventing the Cape of Good Hope. Such diversions result in a 10-day sailing extension and significant additional costs for shipments.

Corey Ranslem, CEO of British maritime consultant Dryad Global, emphasized the lack of clarity surrounding the coalition’s specifics, including the number of warships involved, their arrival time, “rules of engagement,” and the “protection” framework, Breitbart reported.

The Red Sea region is relatively compact, but ensuring the safety of commercial vessels could be a considerable undertaking, depending on Houthi tactics and the number of vessels. Ranslem anticipated a rise in companies “diverting around Africa” or halting operations if they remain unconvinced about the coalition’s ability to “guarantee” security.

As a consequence, Red Sea traffic has diminished already by approximately 14%. Particularly, Hapag Lloyd, a major German shipping company, announced its continued redirection of traffic away from Yemeni waters until at least Dec. 31. Other firms willing to traverse the Red Sea demand high-risk premiums and assurances of reimbursement for potential Houthi-related losses.

Eilat Port in Israel reported an 85% decrease in activity, citing Houthi attacks on Red Sea shipping. Gideon Golber, CEO of Eilat Port, expressed concerns about potential worker “furloughs” if a solution for the Houthi threat is not found promptly.

Large shipping companies are adopting a wait-and-see approach, assessing the size and capabilities of the Operation Prosperity Guardian task force. Questions loom regarding the extent of their actions beyond intercepting missiles and whether they can offer adequate assurances to shipping firms.

“Will they do anything except swat the missiles out of the sky? If that’s all, then will it give the assurances that are needed for shipping companies?” a source asked when speaking with Reuters.

The Biden administration faced criticism for a delayed response to escalating Houthi piracy. Despite the Houthis openly declaring their intent to attack ships connected to Israel, the administration took time to assemble an international coalition to safeguard Red Sea navigation.

Recent developments saw Greece committing a frigate to the multinational operation, emphasizing the protection of merchant ships, seafarers, and the global economy. Notably absent from the coalition were regional heavyweights Egypt and Saudi Arabia, with sources suggesting their concerns about regional stability, relations with Iran, and the potential backlash from Arab nations.

Analysts believe that Saudi Arabia’s reluctance to join Operation Prosperity Guardian may be influenced by a desire to disengage from Yemen, avoid upsetting Iran, prevent regional destabilization, and manage potential backlash over Gaza.

As uncertainties persist, logistics consultants warn of at least 90 days of shipping disruptions in the Red Sea, advising clients to consider intermodal transport options.

This includes using multiple shipping methods, such as air transportation, despite its higher cost, to mitigate potential delays caused by Houthi disruptions. The industry braces for increased fuel and goods prices in Europe if companies continue diverting around Africa, adding around 30 days to transit times.

Information from Reuters and The Associated Press was used in this report.

Jim Thomas |

Jim Thomas is a writer based in Indiana. He holds a bachelor’s degree in Political Science, a law degree from U.I.C. Law School, and has practiced law for more than 20 years.

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