How Red Sea attacks disrupted shipping and Suez Canal trade

What disrupted the shipping route?

Attacks on international shipping in the Red Sea began in early November 2023, International Maritime Organization chief Arsenio Dominguez told the United Nations Security Council on 3 January 2024. Subsequent attacks, diversions and military responses disrupted the route. As of March 2024, the International Monetary Fund had documented a sharp fall in trade passing through the Suez Canal.

The canal provides the shortest sea connection between Asia and Europe and normally handles roughly 15 percent of worldwide maritime trade volume, according to the IMF. Ships avoiding the Red Sea took the longer route around the Cape of Good Hope, adding at least 10 days to deliveries on average.

November 2023: seizure and widening targets

The Houthis seized the Galaxy Leader on 19 November 2023. Japan told the Security Council that the vessel was Japanese-operated and carried 25 crew members of different nationalities. Dominguez said ships connected to Israel were initially targeted, but information about later incidents suggested attacks were no longer confined to those vessels.

Japan's representative said the Houthis presented their actions as support for Palestinians fighting Israel. UN Assistant Secretary-General Khaled Khiari called for the attacks to stop and for the ship and crew to be freed, while urging restraint to prevent Yemen being drawn into a regional conflict.

December 2023–January 2024: military responses

Khiari told the Council that the Houthis had claimed missile attacks against MSC United on 26 December and Maersk Hangzhou on 31 December. US forces intervened after Maersk Hangzhou sent two distress calls. The US representative said Houthi boats tried to board the vessel, then fired at responding US Navy personnel; he described the sinking of three boats as self-defence.

In a statement dated 12 January 2024, the UK government announced British and US strikes against Houthi military facilities in Yemen. Britain characterised the strikes as self-defence, saying their purpose was to reduce Houthi military capabilities and safeguard shipping.

Shipping companies take the longer route

Maersk suspended Red Sea voyages again on 2 January, Khiari reported. Hapag-Lloyd announced that day that its ships would continue avoiding the route and sail around the Cape until 9 January. By the 3 January Council meeting, Dominguez said roughly 18 shipping companies had chosen diversions around southern Africa, lengthening journeys and pushing freight rates higher.

What the trade figures measured

The IMF's analysis dated 7 March 2024 used PortWatch's high-frequency transit estimates. It found that Suez Canal trade volume in January and February was 50 percent below the corresponding 2023 level, while estimated transit around the Cape of Good Hope increased 74 percent. The Suez figure measured trade volume, not canal revenue.

The IMF said delays had hurt businesses holding limited inventories. It warned that prolonged disruption could interrupt supply chains and increase inflation through higher transport costs. Later arrivals could also shift imports from one month's customs figures into the next, making monthly trade growth appear weaker.

Risks for Yemen

At the January Council meeting, Malta called for navigation rights to be protected in the Red Sea and Strait of Bab Al-Mandab. It also warned that further escalation could threaten humanitarian assistance reaching Yemen.