EVERYTHING from your willingness to enter specific markets, trades and deals, to your preferred ratio of spot vs long-term charter or your view on future fuel investment is governed by appetite for risk.

It varies depending on who you are, where you are and what you consider to be an acceptable gamble.

In the Red Sea we have watched risk appetite play out in real time across the global fleet.

The visible exodus by the roughly 65% of vessel operators who have continued to eschew the very real threat of Houthi attacks has remained consistent for the past year, regardless of the frequency of those attacks. But there are still hundreds of ships trading daily where others fear to sail, and the numbers will wax and wane regardless of the underlying threat to shipping.

Those that have continued to trade do so having assessed their own profile, the established patterns of attack and, in varying degrees, their own risk appetite, conscience and insurance arrangements.

The Red Sea remains a dangerous place for shipping. The regular barrage of strikes targeting Yemen has added the risk of collateral damage, while in no way diminishing the zeal with which the Houthis continue to pass edicts and threaten passing traffic. Just because they haven’t hit a ship in a while does little to reduce the threat. But then the risk of being left out of a trade that competitors are profiting from is a tangible risk too.

The news overnight that the US and Houthis may have reached some sort of compromise over attacks on each other is unlikely to see an immediate change in the approach to risk. The Yemeni faction said it would still target Israel-owned vessels, and its track record on determining ownership has not been that great in the past.

The fact that there are some big names testing the waters, presumably in a bid not to get left behind when the time comes, is certainly interesting. But does that mean a wholesale rerouting of global maritime trade is imminent?

Well, no.

There is zero appetite from the container lines to return because they know that it would damage an already fragile market. But there are clearly spot traders itching to get back and profit from trades that more cautious competitors would happily miss out on. There are also several more big names weighing up their options we hear and the first ships in will likely be the ships on charter to them.

Nobody wants to be the first, but they don’t want to be the last either. Considering a select number of transits for the moment is likely the best compromise in a highly complex situation, was the assumption from one analyst we have been talking to.

Meanwhile, the crew on board these ships will continue to bear the brunt of these shifting risk assessments that are being made on their behalf.

Richard Meade
Editor-in-chief, Lloyd’s List

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