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The week that marked a turning point for shipping in the Red Sea

Judged on the yardstick of facilitating freedom of navigation, the air strikes on Yemen have achieved little. But President Biden knows that

The impact on the Suez Canal will not be permanent. But it is now effectively closed to those who are risk adverse, and/or allied to Western countries seen as supporting Israel

IF TWO of the rich world’s most powerful militaries want to drop bombs on a desperately poor country in which upwards of 20m people remain on the cusp of famine, they should at least be able to furnish a coherent rationale.

But when Joe Biden was asked if US and UK air strikes on Yemen had had the desired effect, he was hard pushed to come up with anything approaching intelligible justification.

“Well, when you say, ‘working’ — are they stopping the Houthis? No,” he admitted. “Are they gonna continue? Yes.”

That looks a succinct summation. More than a week after the ongoing action commenced, it is unclear what purposes useful to shipping have been served.

Analysts point to plausible assumptions that the missiles which the Houthis use to attack merchant vessels are stored in caves and that drones employed for such purposes require little by way of launch infrastructure.

If they are right, Houthi offensive capability has likely not been much dented, let alone significantly degraded.

If the object of the exercise is not simply to hand the bad guys a symbolic punishment beating, but actually facilitate freedom of navigation through the Red Sea, the picture looks little better.

Marine insurers have inevitably responded to the heightened risk perception created by the air strikes by hiking prices to somewhere near the point at which circumnavigating the Cape of Good Hope suddenly doesn’t seem that expensive after all.

Even those shipowners who previously decided not to reroute on grounds of vessel, cargo and crew safety are at least adept at reading price signals. The more economically difficult decision to send tankers and bulkers the long way round has now been taken.

Data from Lloyd’s List Intelligence shows that just 290 ships over 10,000 dwt transited the Suez Canal in the seven-day period ending January 14, compared to 440 vessels in the week ending November 26, shortly after the Houthis’ first significant attacks.

No major liner with the exception of CMA CGM, which enjoys the protection of the French Navy, is now using the Suez Canal. Naval protection comes as part of the package when choosing a flag state, and India is also shielding Indian tonnage.

But a projection from the International Energy Agency suggests that tanker traffic through Suez could plunge by a third by the end of January.

There is still some divergence in risk appetite, however. Many dark fleet tankers appear happy to cough up the fees demanded by the canal authority. 

The impact on the Suez Canal will not be permanent. But it is now effectively closed to those who are risk adverse, and/or allied to western countries seen as supporting Israel.

This is happening just at the time when the world’s second-most important human-made waterway is having to ration passages on account of climate change-driven low water levels. There are also delays of up to 18 days in the Bosporus, and this is the northern hemisphere winter.

Do the maths and supply chain disruption is inevitable, if not to the extent imagined by the pundits and professional doomsters popping up on television and radio and in national newspapers right now.

A degree of additional pressure on inflation is a reasonable expectation, although past precedent suggests that it may not be as dramatic as some are declaiming.

While even a fraction of a percentage point on supermarket bills is hardly good news, prices are going up at a rate so fast that consumers will scarcely notice the additional burden. More lurid predictions of shortages in the shops are probably wide of the mark.

So what next? The Houthi onslaught is ostensibly an act of solidarity with Gaza, so a ceasefire between Israel and Hamas could potentially bring it to a close.

But there is no sign of rapprochement so far, and the best guess has to be that war will continue for months longer. There is also the ghastly but not negligible prospect of an extension of the fighting.

Other regional actors are already passively involved — if “passively” is the right word for a small scale but very real shooting involvement — and it would be all too easy for matters to escalate.

In a year in which 70 states hold contested elections, much will depend on wider politics, not least the US presidential race, which seems likely to be a rematch between Biden and Donald Trump.

The latter’s trade policies are known to be capricious, and if he secures a second term, it stands to be much more disruptive than the first. Shipping should worry about that prospect if and when we come to it; immediate concerns are rather more pressing.

Whether Biden wins or not, he remains in charge for at least another year. Given the priorities for Washington’s policies in the Middle East at the moment, his unnecessary bombing campaign seems a risky course.

Military resources, which are a scarce resource, might more usefully be devoted to Operation Prosperity Guardian.

“If it ain’t broke, don’t fix it” is already a standard Americanism. It could usefully be joined by “if it ain’t working, why do it?”

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