Odd Lots How Global Shippers Are Dealing With a Worsening Red Sea Crisis
Feb 1, 2024
Sal Mercogliano, a maritime historian and Campbell University professor, dives into the escalating crisis in the Red Sea. He discusses the impact of Houthi attacks on shipping, rising insurance costs, and operational dilemmas faced by shipping companies. Mercogliano sheds light on military responses to secure vital trade routes and highlights historical context, including the U.S. Navy's role. The conversation also covers shifts towards regional shipping solutions and their implications for global trade and logistics.
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Red Sea Disruption Magnitude
- The Red Sea shipping disruption, impacting 11% of global trade, is historically significant.
- The Houthi rebels, a small group in Yemen's civil war, are causing this large-scale disruption.
Houthi Strategy
- The Houthis initially targeted Israeli-linked ships but expanded attacks to raise shipping costs.
- They aim to increase war risk insurance, making it expensive for vessels to transit the Red Sea.
War Risk Insurance
- War risk insurance is assessed by London-based committees and applied per voyage.
- The cost is a percentage of the ship and cargo value, impacting decisions about routes.
