Home Business News Economic terrorism in Red Sea set to increase shipping costs that will be ‘passed on to consumers’

Economic terrorism in Red Sea set to increase shipping costs that will be ‘passed on to consumers’

by LLB Finance Reporter
19th Dec 23 2:02 pm

Houthis rebels based in Yemen continue to target commercial cargo vessels in the Red Sea forcing ships to take an alternative route which will cost shipping companies more money.

Multiple companies are being forced to re-route or even cancel their movements in the Middle East and north African region.

Economist have warned that this will create disruption to global trade which will have an increased cost on the world economy.

The Houthis militant group have vowed to up their attacks on commercial cargo vessels despite the US, French and the UK sending warships to the region to engage in destroying dozens of attack drones daily.

The Houthis have said on Tuesday that naval operation will be conducted every 12 hours on vessels in the Red Sea.

The Houthis group’s spokesperson and top negotiator Mohammed Abdelsalam told Al Jazeera TV, “As for naval operations, they are in full swing, and perhaps not 12 hours would pass without an operation.”

Four of the world’s five largest container shipping companies, Maersk, CMA CGM Group, and Hapag-Lloyd and now BP have all temporarily suspended shipments across the region.

Chief infrastructure officer Rabab Raafat Boulos said, “With the line of impacted vessels building fast in the area, progressing with speed will be key for the coalition in order to minimise direct negative impact on global trade.”

Torsten Slok, the chief economist of Apollo Global Management, said, according to Bloomberg, “Rising uncertainty in the Suez channel combined with the global economy rebounding because of easier financial conditions could put upward pressure on goods inflation over the coming months.”

Henning Gloystein, a director at researcher Eurasia Group, told Bloomberg, “The situation does mean an increase to shipping costs and some short-term delivery delays.

“All these costs will be directly passed on to consumers.”

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