Horst D. Deckert

Red Sea Blockade Undermining Global Commerce – Report

Attacks on container ships have reduced traffic through the Suez Canal

World trade plunged by 1.3% from November to December 2023 as a result of Houthi attacks on merchant vessels in the Red Sea, according to a new report by the IfW Kiel.

The German economic institute said on Thursday that the volume of containers transported via the Red Sea had plummeted by more than half as of December and is currently almost 70% below the volume that would usually be expected.

The research shows that currently around 200,000 containers are being transported via the Red Sea daily, down from some 500,000 per day in November.

“The detour of ships due to the attacks in the Red Sea around the Cape of Good Hope in Africa means that the time it takes to transport goods between Asian production centers and European consumers is significantly extended by up to 20 days,” said Julian Hinz, director of the IfW Kiel’s trade policy research center.

“This is also reflected in the declining trade figures for Germany and the EU, as transported goods are now still at sea and have not already been unloaded in the harbors as planned,” Hinz added.

The IfW Kiel’s trade indicator for December shows exports from and imports to the EU dropped by 2% and 3.1%, respectively. The US saw a 1.5% decline in exports and a 1% fall in imports, even though the route through the Red Sea and the Suez Canal plays a lesser role for the US than for Europe, according to the report.

China’s trade bucked the trend, with both exports and imports up 1.3% and 3.1%, respectively. The increase could be likely due to the upcoming Chinese New Year, IfW Kiel wrote.

Shipping giants such as Maersk and Hapag-Lloyd started sending their vessels on longer and more expensive journeys around southern Africa’s Cape of Good Hope after Yemen-based Houthi rebels instituted a de facto blockade through the Red Sea and the Suez Canal. They have been attacking vessels thought to be linked to Israel in what they say is a show of solidarity with the Palestinians following the escalation of hostilities in Gaza.


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