He container shipping through the Red Sea ha down almost a third this year due to continued rebel attacks Houthis of Yemenas reported on Wednesday by the International Monetary Fund.
“Container shipping has decreased by almost 30%,” he said. Jihad Azourdirector of the IMF’s Middle East and Central Asia department, adding that “The decline in trade accelerated earlier this year.”
The decline in trade flows in the Red Sea due to continued attacks by the Houthis, a militant group backed by Iranhave increased global shipping costs, have caused cargo carriers or their customers to opt for longer alternative routes from Asia to Europe and the United States and have raised alarms about the economic costs of a broader war
According to Moody’snearly a fifth of U.S. cargo arrives at East Coast ports after transiting the Red Sea and Suez Canal. Solar panels, electric vehicle batteries, toys and vacuum cleaners are among the products that make that journey. But for now, economists don’t anticipate a major impact on the prices American consumers pay unless the violence worsens.
Amid uncertainty about how long the attacks will last, manufacturers and retailers are already feeling the economic and the impact on the industries grows. Car manufacturers Tesla and Volvo They said they would idle their plants in Germany due to spare parts shortages related to the outage. The British oil company Shell stopped all its shipments through the Red Sea.
The European Union prepares a naval mission
In this context, to protect ships from rebel attacks, The European Union plans to launch a naval mission in the Red Sea within three weeksThe head of the bloc’s diplomacy said on Wednesday.
EU foreign policy chief Josep Borrell said he wants the mission to be underway by February 17. According to the authorities, seven EU countries are willing to provide ships or planes. Belgium has already committed to sending a frigate. Germany is expected to do the same.
Last week, US and British forces bombed multiple targets in eight localities used by the Houthis. It was the second time the two allies carried out coordinated retaliatory attacks against the rebels’ missile-launching capabilities.
Borrell said, however, that EU mission will not participate in any military attack.
“This is the objective: the protection of ships. Intercept attacks against ships. Do not participate in any type of actions against the Houthis. Just block the Houthis attacks,” Borrell told reporters before chairing a meeting of EU defense ministers in Brussels.
Ministers are expected to decide later on Wednesday Which member country should lead the naval effort – France, Greece and Italy are vying for that role – and where the mission headquarters should be located.
Borrell noted that companies have been demanding EU intervention, given the commercial implications of forcing merchant ships to circumvent the Red Sea on their route to and from Europe.
“Many European companies asked us because their business model is suffering a lot due to the high increase in costs and having to go down to South Africa,” he said, referring to the alternative route that merchant ships are taking. “It is affecting prices, it is affecting inflation. So it is natural that we try to avoid this risk.”