The Red Sea Crisis

What is the Red Sea??

The Red Sea, a vital maritime pathway of global significance, serves as one of the world's vital trade routes, facilitating the annual passage of approximately $1 trillion worth of goods. It links Asia, Europe, and East Africa through its route.

What is happening in the red sea?

The Red Sea is currently under a serious threat posed by the Houthis, a Yemeni rebel group supported by Iran. Since November 2023, the Houthi rebels, who control large parts of Yemen, have launched numerous attacks on commercial vessels traversing via that path.

?In Yemen, this set of people opposes the Saudi-led coalition by attacking commercial vessels traveling via the Bab el-Mandeb strait, a narrow passage connecting the Red Sea and Gulf of Aden. The Houthis, who control a large part of Yemen, have declared their support for their "Palestinian brothers in Gaza and the West Bank" and say they are targeting commercial vessels with links to Israel. These attacks, primarily using drones and missiles, have targeted not only ships allegedly linked to Israel but also vessels from various countries with no apparent connection to the conflict.

How Houthi attacks affect the global economy?

The consequences of these attacks are extensive, this situation has caused shipping companies to reroute vessels, leading to delays, increased insurance costs, and potential shortages of essential goods. For instance, tankers carrying diesel and jet fuel from the Middle East and Asia are being redirected.

Meanwhile, shipments of consumer goods, commodities, clothing, and food are experiencing significant delays. This also has heightened security concerns about the safety of seafarers and the potential for wider escalation.

The issue in the Red Sea has led to global concerns, evident in the rise of oil prices, compounded by reports of disruptions at Libya's largest oilfield. However, crude prices have maintained relative stability and remain considerably lower than recent months, witnessing a decrease of nearly $20 per barrel since the autumn.

Another alarming thing to consider is that due to this, there occurs a humanitarian crisis in Yemen. This could further exacerbate the situation by hindering the delivery of vital aid supplies.

How is the red sea route vital in India?

It is important to know that India is heavily reliant on the Red Sea pathway, seeing 20% of its exports passing through this route. Key exports such as rice, tea, gems, and more are directly affected, underscoring the urgency for a comprehensive understanding of the situation.

Recent Developments:

Major carriers have been turning off AIS transponders for many in-transit vessels in the last week of December.

Finding a path forward:

• Maritime security measures: Countries with interests in the Red Sea need to work together to enhance maritime security measures and ensure the safe passage of commercial vessels. This could involve increased intelligence sharing, coordinated patrols, and the establishment of safe corridors for shipping.

• Addressing the humanitarian crisis: The international community must continue to provide humanitarian assistance to the Yemeni people and work towards a long-term solution for this.

Role of AIR 7 SEAS:

• Given the apparent limited impact on Air Freight due to the Red sea attack, take advantage of the most competitive prices available in the market during these challenging circumstances to facilitate the transportation of your cargo through this route.