Houthis' Fight With Israel Could Mean Continued Risks for Shipping

 

Yemen's Houthi rebels have begun to clarify their version of the Red Sea truce agreement announced by the White House, and it appears that international shipping may still face risks on the waterway. 

On Tuesday, President Donald Trump announced that the Houthis had "capitulated" after an extended U.S.-Israeli bombing campaign. The group agreed to stop attacking U.S. shipping, Trump said, and U.S. forces would immediately stop bombing sites in Yemen. 

After Trump's statement, official Houthi media channels announced that the group would continue to attack Israel in retaliation for the ongoing military operations in Gaza. On Wednesday, Houthi spokesman Mohammed Abdulsalam emphasized that the new agreement with the White House did not affect the group's hostilities with Israel in "any way, shape or form." 

If the Houthis' plans to attack Israel also extend to Israeli shipping, the new ceasefire may not reduce risk for foreign-flag commercial traffic. The Houthis have previously attacked vessels with documented links to Israel, but they have used the same justification to attack vessels with no clear Israeli ties - and even vessels that have clear ties to Houthi allies. If this targeting pattern continues, neutral vessels could be targeted as "Israeli ships," whether by accident or by intent. 

Given the uncertainty, leading ocean carriers have suggested that they will wait some months after hostilities end before returning their ships to the Red Sea at scale, in part because of the cost and disruption of adjusting global networks to a different route. It would be expensive to change from the Cape of Good Hope route to Suez, then change back to the Cape route again if the Houthis began targeting foreign-flag merchant ships once more. 

Analysts agree that when container shipping does return to the shorter Red Sea route, the global ocean freight market will return to a familiar pattern - overcapacity and thin margins. 

"The one element of the container shipping market that affects freight rates the most . . . may be nearing an end. But, let's see if this is really happening," said Xeneta lead analyst Peter Sand in a social media post. "If transiting the Red Sea to its full extent is once again safe . . . the balance of the market will once again shift. From its current tightness to one where overcapacity will depress freight rates."