PortEconomics member Theo Notteboom joins Hercules Haralambides and Kevin Cullinane in their latest editorial for the scholarly journal Maritime Economics and Logistics, which addresses the Red Sea Crisis and its major disruption affecting the dynamics of ports shipping and related maritime supply chains.
The attack of Hamas on Israel on October 7, 2023, and the military response of the latter in Gaza have made news headlines for much of the last quarter of 2023 and early 2024. The international community has attempted to prevent the escalation and spreading of the conflict to other parts of the Middle East and the wider world. A major security situation emerged in mid-November in the Red Sea, when Houthi Rebels based in Yemen started to target international shipping transiting through the region. This crisis is yet another major disruption affecting the dynamics in shipping and logistics. In the past few years, interoceanic passages and routes have been significantly affected by a series of weather anomalies (e.g., the drought which has reduced the capacity of the Panama Canal by 36% (Associated Press 2024), military conflicts (e.g., the Russia–Ukraine war; the Gaza-Israel crisis), and nautical accidents and vessel groundings (e.g., the ‘Ever Given’ incident, when the Suez Canal was blocked for six days in March 2021, at a cost to trade of USD10 billion a day).
This editorial provides insights into the events that occurred during the Red Sea crisis and analyzes the short-term—and probably longer-term—impacts of the Red Sea crisis on vessel operations and shipping networks, freight rates and pricing practices, and global supply chains.
As the Red Sea crisis is still unfolding at the time of writing, the Editorial focuses primarily on the early impacts of the crisis on the shipping industry and global supply chains. The full impacts can only be known with some degree of accuracy once the crisis has come to an end or has been contained in such a way that the levels of uncertainty and insecurity faced by shipping and trade have been reduced to acceptable levels. However, it remains unclear under what conditions shipping lines will consider the Red Sea as a safe passage. Will they resume vessel transits when the Red Sea is without incidents for X number of days, or alternatively, will the Red Sea passage be considered safe only when Houthi rebels formally agree to stop all actions after negotiation talks or military intervention?
The article has been published in Maritime Economics & Logistics and can be freely downloaded here.
