Red Sea attacks threaten supply chain, Cyprus Shipping Chamber warns

Director General of the Cyprus Shipping Chamber Thomas Kazakos said that there is an urgent need to address the Houthi attacks against ships sailing through the Red Sea, stressing that these pose a risk to the global supply chain.

Speaking to the Cyprus News Agency (CNA), Kazakos emphasised that the consequences of these disruptions could surpass those of the coronavirus pandemic if not addressed promptly.

He underlined the vulnerability of an island state like Cyprus, where 98 per cent of trade relies on maritime transportation.

Initially triggered by the conflict between Hamas and Israel, Houthi attacks targeted ships linked to Israeli interests. However, according to Arsenio Domíguez, the new Secretary-General of the International Maritime Organisation (IMO), these attacks have now broadened to target shipping more widely.

Speaking to CNA, Domíguez said that “the situation is alarming. What started as a regional conflict has escalated into a threat to global maritime trade. We need a coordinated international response to ensure the safety of shipping routes.”

Notably, major shipping companies, including industry giants like Maersk, Hapag Lloyd, and MSC, have announced the halt of transit through the critical sea passage, accounting for approximately 15 per cent of international trade, as per Domíguez. This unprecedented move has sent shockwaves through the industry, raising concerns about the broader economic implications.

Kazakos urged strengthening the Prosperity Guardian operation to safeguard navigation and seafarers. He stressed the need for increased naval and air forces with clear terms of reference for providing protection. Additionally, he called for enhanced intelligence sharing among nations to better anticipate and counteract potential threats.

Moreover, Kazakos outlined potential consequences, noting that essential commodities like fuel, wheat, iron, and pharmaceuticals could face delays, leading to inflationary pressures.

It should be noted that bypassing the Suez Canal, a crucial sea route from Asia to Europe, would result in increased travel time, fuel costs, and delayed deliveries, impacting global economies.

In a joint statement, leading industry associations, including the International Chamber of Shipping and the Baltic and International Maritime Council, echoed Kazakos’ concerns. They called for an immediate diplomatic resolution to the conflict and urged governments to prioritise the protection of shipping lanes.

Expressing doubt about the effectiveness of armed guards alone, Kazakos argued that attacks, often executed using drones, pose challenges for ship systems and patrolling forces. He called for the immediate involvement of naval and air forces.

“The international community must support and protect global trade, which is 90 per cent dependent on global shipping,” he said.

Kazakos’ comments underlined the fact that without swift resolution, the increase in oil prices and transport costs could be felt in the coming weeks, impacting importers, consumers, and national economies.

Finally, the director general stressed the necessity of global cooperation to address the escalating threat to maritime trade.