Wednesday, December 27, 2023

what is the long-term impact of the red sea attacks on global trade?

The long-term impact of the Red Sea attacks on global trade could be significant and multifaceted. The Red Sea is a major artery for global trade, with about 12% of global trade passing through it, including a substantial portion of the world's container shipping and energy supplies[2][5]. The attacks have led to major shipping companies halting or rerouting their shipping to avoid the Red Sea route[1][2]. 

The alternative route around the Cape of Good Hope adds approximately 3,500 nautical miles to the journey, which translates to about ten additional days of transit time and increased shipping costs[2][4]. This rerouting is estimated to push the prices of goods, including Indian agricultural products, by 10 to 20 percent due to higher transport costs[3]. The increased costs and longer delivery times are likely to be passed on to consumers, potentially driving up the price of goods and contributing to inflation[7].

The attacks have also prompted concerns about energy prices, particularly for consumers in Europe, as about one-fifth of Europe's energy supplies pass through the Red Sea[11]. The disruption could have a considerable impact on local states and the global economy if it persists[11].

In response to the security threats, the United States launched Operation Prosperity Guardian, a multinational security initiative to ensure the safety of maritime commerce in the region[13]. However, the initiative has faced challenges, including the withdrawal of key nations like France, Italy, and Spain[7].

In summary, the Houthi attacks on shipping in the Red Sea have disrupted global supply chains, leading to rerouted shipping routes, increased costs, and longer transit times, with potential implications for global trade and consumer prices. If these disruptions persist, they could have a significant long-term impact on global trade, potentially contributing to inflation and impacting energy prices, particularly in Europe[7][11].

[1] How Houthi attacks on ships in the Red Sea are affecting global trade
[2] Houthi Attacks in the Red Sea Disrupt Global Supply Chains
[3] Red Sea attacks, Panama Canal drought: How trouble at two shipping choke points could impact global trade
[4] Global retailers, goods facing disruption risks from Red Sea attacks | Reuters
[5] Red Sea attacks: How will global trade be affected? – DW – 12/20/2023
[6] Houthi Ship Attacks Are Affecting Red Sea Trade Routes
[7] Red Sea Chaos Risks Driving Up Price of Goods for Global Economy
[8] Red Sea Attacks, CBP’s Response Disrupt Global Supply Chains
[9] What attacks in the Red Sea could mean for the global economy
[10] Houthi attacks rocking Red Sea trade routes likely won't end anytime soon. Here's what could happen next
[11] The Costs the Houthis Are Poised to Inflict on the Global Economy
[12] Security concerns in Red Sea & Suez Canal force major shipping detours, impacting global trade - ET EnergyWorld
[13] How Attacks on Shipping in the Red Sea Could Affect the U.S. Economy
[14] Analysis | Houthi attacks on shipping threaten global consequences
[15] Suez disruption: a new inflation risk on the horizon
[16] New risk to inflation? Cost of the Red Sea attacks on global trade | Euronews
[17] How Houthi attacks in the Red Sea impact shipping in the Suez Canal
[18] Red Sea attacks impacting global trade as more shippers ban the area due to Houthi militants
[19] Mapped: Houthi shipping vessel attacks around the Red Sea
[20] Red Sea Attacks Pose Another Threat to Global Economy
[21] How Houthi attacks on ships in Red Sea are disrupting global trade

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