"The ships are at the mercy of air strikes"

The pandemic and the war in Ukraine have shown how easily supply chains can be disrupted. Most recently, the Houthi rebels have caused concerns for the shipping industry with their attacks in the approach to the Suez Canal. In this interview, expert Irina Haesle, Member of the Executive Board of the German Shipowners' Association (VDR) and responsible for maritime security issues, explains when it becomestoo dangerous to sail through the strait.

Once again this week, a merchant ship was attacked on a sea route in the Middle East. The Houthi rebels reportedly only want to let through freighters carrying aid for the Gaza Strip and regard all others as "legitimate targets" of their forces. What does this mean for trade by sea?

Irina Haesler: What the Houthi rebels have now announced is a de facto blockade of Israel. They want to ensure that no more goods reach Israel. However, the affected region in the Red Sea is the entrance to the Suez Canal. This is one of the busiest waterways in the world, with 65 ships passing through it every day, accounting for 12 percent of global goods traffic. The current situation is therefore clearly a threat to the free movement of goods and supply chains. The announcement by the Houthis that they intend to attack all ships bound for Israel, regardless of their flag, adds a new dimension.

Can the Houthis even tell which ship is headed for Israel and which is not?

That is precisely the risk facing the shipping companies. Nobody knows what criteria the Houthis will ultimately use to make their decision and attacks can also go wrong, i.e. accidentally hit other ships. There is therefore a general risk for all merchant ships currently passing through the Red Sea area.

The Strait of Bab el-Mandeb, which separates the Red Sea and the Gulf of Aden, is currently the main focus of attention. What goods are transported along it?

Really everything is transported there: Food, furniture, medicines, grain, cement, coal and, of course, oil and liquid gas, which is particularly important for Europe. If nothing could be transported in this area, it would not only affect one specific area of goods, but would be all-encompassing.

Europe gets a lot of its oil and liquid gas from the Red Sea. Europe and Germany would therefore be particularly hard hit.

In principle, the current security situation is a problem for all countries. But the Suez Canal is the gateway to Europe, both for imports and exports. It is primarily used for trade between Europe and Asia. Traffic there is therefore important on the one hand to ensure our security of supply. On the other hand, as an exporting country, Germany is particularly affected if commercial shipping is affected by unsafe sea routes.

Are the effects already noticeable?

There have been no short-term effects so far. We don't yet have empty supermarket shelves like in coronavirus times. However, this could change in the medium term if the situation worsens and ships have to divert via the Cape of Good Hope near Cape Town. This is the only alternative route and extends the sea route by 14 days. This naturally causes delays in the supply chains. So far, however, this alternative route has only been used occasionally.

A longer sea route probably also means higher costs.

The calculation is difficult to make because the passage through the Suez Canal is also associated with high costs and insurance premiums for the route through the Red Sea have risen sharply. The costs incurred on a longer sea route are primarily fuel costs. In addition, there may be changes in operational procedures if the ship is in port 14 days later. And, of course, a longer route is also more harmful to the climate because it causes far more CO2 emissions than the short route through the Suez Canal.

How much more do shipowners currently have to pay for insurance if they want to sail through the Red Sea?

Unfortunately, we have no insight into this. The amount of the premium depends on the insurer's risk assessment, i.e. whether a ship has a US connection or even an Israeli connection, for example. In some cases, Israeli ships are no longer insured at all.

Which shipping companies and nations sail through the Red Sea waterway?

A great many pass through there. However, ships with a European connection make up a very large proportion. That's why we in the association also want the government or Europe to take action.

When does it become too dangerous to sail through the strait in question?

That is a difficult question. Shipping companies are currently deciding on a very short-term basis whether or not to send their ships through certain sea areas based on current situation reports and safety assessments. At the moment, no one is saying: "My ship will be leaving in a week and it's no problem to send it off. Unlike piracy, where the attackers approach the ship by boat, the Houthis have attacked from the air in recent incidents. Although there are many safety precautions on board a ship and clear procedures in the event of certain threats, ships are at the mercy of air attacks. This is what makes the situation so delicate.

Shipowners are calling for military protection in the Middle East to be stepped up. Is there no way around rearmament in the region right now?

I wouldn't call it rearmament, it's about more military resources. The USA already called for an international partnership last week and, like France, already has frigates on the ground. The tanker flying the Norwegian flag, which was shot at on Monday, would otherwise probably have been hit harder. We now need a coordinated EU mission together with Norway, the USA, the UK and whoever else wants to join in. This is a problem of major proportions which, at the end of the day, threatens the prosperity and freedom of us all. All European shipping associations have spoken to each other this week and agree that the EU must take action here. The military presence of a community of states to secure the sea route is in itself a signal to the region.

What must the mission in the Red Sea look like for it to be truly effective?

One ship or one frigate will not be enough. As shipowners, we propose extending the scope of the Atalanta mission. This mission is running in the Horn of Africa off Somalia and is aimed at curbing piracy and has already been implemented. We don't have time to discuss it for two years, we need to ensure greater security quickly. Missions that are already underway are a good place to start.

How explosive is the current situation with regard to a further escalation of the Middle East conflict?

The region has not seen an escalation like the current Hamas attack on Israel for a long time. The entire region has become unstable as a result, in addition to an already geopolitically unstable situation. In my opinion, everything is to be expected. It would be wrong to say that there will be a catastrophe. But it would be just as wrong to simply assume that the situation will ease. We must at least prepare ourselves for the fact that the conflict will continue for longer and could even get worse.

The coronavirus pandemic and the Russian war of aggression have shown how easily supply chains can be shaken. What would a reduction in traffic through these straits mean for the global economy now?

Restrictions on trade routes always have an impact on the global economy, whether it was the blockade in the Suez Canal or the disrupted supply chains in the coronavirus era. If goods can no longer be delivered on time and in sufficient quantities, this has an impact on the global economy - especially if this is the case over a medium to long period of time. The longer such a blockade lasts and the less hopeful economists are about the situation, the greater the impact. And in the shipping industry, of course, the effects are felt immediately.

So how likely is it that the supply situation will be threatened by the situation in the Red Sea?

I can't give you a percentage, the situation is too complex for that. One thing is clear: if maritime supply chains are disrupted, supply in the countries concerned is at risk. After all, the majority of goods come by sea. This does not mean that we in Europe will go hungry. But we will find that goods are not available or that the delivery time for a sofa is three months instead of three weeks.

Victoria Robertz spoke with Irina Haesler

The interview previously appeared on Capital.de.

Read also:

In response to the Houthi rebels' threat to attack all ships bound for Israel, the shipping industry is facing a new challenge. The tactic of only allowing aid ships to pass through the Gaza Strip while considering others as legitimate targets is likely to disrupt trade by sea.

Given the Houthi rebels' unclear criteria for selecting targeted ships and the potential for erroneous attacks, the situation is creating a significant risk for all merchant ships in the Red Sea region. This uncertainty and potential for accidents are making navigating these waters increasingly dangerous for shippers.

Source: www.ntv.de