Houthi attacks are having a major effect on global supply chains which today are highly orchestrated.
Nine weeks ago today, the crew of the Bahamas flagged ship Galaxy Leader, a 22 year-old vehicles carrier, had an unpleasant surprise. Made up of nationals from Bulgaria, Ukraine, the Philippines, Mexico and Romania, the 25 crew members found themselves surrounded by gun toting Yemeni terrorists, known as the Houthis, as the ship made its way up the Red Sea. The captain was ordered at gunpoint to take the ship to the port of Hodeidah in the Houthis controlled north of Yemen, where it still lies at anchor.
This incident started a series of events involving attacks on more than 25 vessels that have caused the amount of shipping through the Red Sea to nosedive. Huge companies, such as Maersk, Hapag-Lloyd and Mediterranean Shipping Company, have decided to suspend travel along that route. Last week the UK oil major Shell also decided to suspend all shipment through the Red Sea indefinitely. Analysis by the German economic institute IfW Kiel found that the number of containers travelling through the Bab el-Mandeb strait into the Red Sea fell by 60% in December. Traffic continues to fall as the Houthis persist in attacking shipping that they claim is assisting Israel’s war on Hamas in Gaza. On Tuesday a Greek-owned bulk carrier was damaged after being hit by a Houthi missile while travelling in the southern part of the Red Sea, the third incident in three days.
The US and UK have responded with a series of strikes against Houthi targets. In the early hours of 12 January alone, some 60 targets, such as munitions depots and launching systems, were hit in 28 Houthis locations in the West of Yemen, in an effort to limit the terrorist group’s ability to launch further attacks. On Thursday the US military fired another wave of missile strikes, the fourth in a week, against Houthi sites after one of their drones hit a US-owned vessel in the Gulf of Aden.
Although dozens of ships are continuing their journeys through the Red Sea despite increased risk, this comes at a cost. Insurance premiums have rocketed and companies are having to cope with increased labour costs, some doubling pay for the duration of transit through the Red Sea. Those companies choosing to avoid their normal route by a detour around the Cape of Good Hope on the southern tip of South Africa are also facing extra costs. A trip from Singapore to Rotterdam, for example, adds 4,000 nautical miles to the journey and takes 10 more days to complete. One ocean trade analytics company, Xeneta, calculates that this adds up to about $3m more per ship, including $1m in additional fuel and $300,000 on insurance and crew.
Houthi attacks are having a major effect on global supply chains which today are highly orchestrated. Moving goods to factories—and away from them to customers—is heavily demand driven and delays can be costly. Take the manufacture of electric vehicles, for example, where Chinese factories dominate the production of many EV components, including crucial lithium batteries. Because of the actions by the Houthi and the re-routing of vessels, automotive giants Tesla and Volvo this week announced pauses to the production of their EVs in Europe, causing huge numbers of hourly-paid workers to be sent home. Finished vehicles travelling from plants in China to European customers are also being delayed by up to 14 days.
But delays are not the only issue linked to Houthi actions. The 3,000 extra miles travelled by ships mean that they burn a lot more fuel and subsequently produce more greenhouse gas affecting climate change. It has been estimated that each ship taking the longer route will produce 2,700 more tons of CO2.
So, who are the Houthis causing all these problems and what do they want to achieve?
Named after its founder, Hussein Badreddin al-Houthi, the group was formed during the turbulence of the unification of Yemen in 1990. The area that comprises Yemen today was split into two territories, north and south from the 19th century to 1990. After the collapse of the Ottoman Empire, North Yemen became independent in 1918, while South Yemen was under British control until 1967, when it became the independent People’s Democratic Republic of Yemen. Following unification Yemen has struggled to build a unified and effective state, plagued by weak institutions, weak nationalism, insurgency and secessionism. Tribal identities have remained strong particularly in the north and many different groups have held power. The Houthis follow the Zaidi branch of Shia Islam and comprise approximately 25% of Yemen’s population. Zaidi Shiites have fought for control of the territory for thousands of years and under the Houthis now control major parts of northern Yemen.
Influenced and inspired by the success of the Lebanese-based militants Hezbollah in repelling western forces, the Houthis attracted the attention of Iran which now provides both groups with weapons and training. This enabled the Houthis to become a major force in the ongoing Yemeni civil war, which began in 2014, and which has resulted in about 400,000 deaths, many of them civilians. Having stormed Yemen’s capital Sana’a at the beginning of the war, the Houthis moved on to control the port of Hudeidah, which generates up to $1 billion in revenues for their leaders. Hudeidah also facilitates the Houthis attack on shipping in the Red Sea.
Since the start of the Israel-Gaza war, following the bestial atrocities of Hamas against Israeli citizens on 7 October, the Houthis aim has been to capitalise on the conflict in order to raise their international profile. It was by claiming to be in solidarity with the Palestinian people that the Houthis started their brazen attacks on shipping in the Red Sea. They say that they want to stop any ship from reaching Israeli ports, though in reality they are attacking indiscriminately. Houthi leaders appear delighted to be finally playing in the big league of the axis of resistance against “Great Satan and little Satan”, namely the US and Israel respectively. If that has a familiar ring, it’s because the Houthis use Iranian slogans, usually printed in green and red, as well as Iranian weapons. “God is Great. Death to America. Death to Israel. A curse upon the Jews. Victory to Islam.”
The Israel-Hamas war has also given the Houthis a new opportunity to gain legitimacy in the region. By attacking western shipping and trumpeting pro-Palestinian demonstrations, the Houthis demonstrate their strong support for the Palestinian people and gain admiration among the people of the Middle East. This tactic appears to be working. A poll carried out by the Palestinian Centre for Policy and Survey Research last month, found that residents of Gaza and the West Bank ranked Yemen’s response to the Israel-Hamas war as the most helpful among regional actors.
The war has also been good for the Houthis at home. It has diverted attention from their failures resulting in Yemen being the poorest country in the Middle East and North Africa. In all Houthis-controlled areas there’s a humanitarian crisis, as public sector workers have not been paid their salaries since mid-2016. The Houthis are also brutally repressive, torturing and executing journalists, arresting and detaining peaceful protestors, and restricting the rights of women and girls. Many Yemenis increasingly see the Houthis as driven by a desire to establish a totalitarian religious state that protects the power of Zaidi elites.
To deal with the threat posed by the Houthis, the United States must push for an end to the current war in Gaza, as attacks against shipping in the Red Sea would have limited utility, if any, in the absence of the conflict. The alternative is to deal with the threat posed by the Houthis by increasing air strikes against their positions. But this could create risks of regional escalation, drawing other countries in the region, such as Iran and Saudi Arabia, into the conflict. But if the Houthi threat is not dealt with, and if commercial shipping is forced to be diverted from the Red Sea for a prolonged period, the cumulative impact on the global supply chains will be extremely serious for industries in many nations, not only in the West, but also in major economies such as China and India.
John Dobson is a former British diplomat, who also worked in UK Prime Minister John Major’s office between 1995 and 1998. He is currently Visiting Fellow at the University of Plymouth.