Several shipping companies have temporarily suspended the Red Sea route, posing more threats to global trade disruptions.

Zhitong App noticed that the attacks by Iran-backed Houthi militants on ships in the Red Sea have shaken global trade. The transportation of goods and fuel may experience more disruptions and price increases.

Since the beginning of the Israeli-Hamas war in early October, more than a dozen ships have been attacked, and several major shipping and oil transportation companies have suspended their Red Sea routes.

Rescue seems to be on the way. US Defense Secretary Austin, who is visiting Bahrain, said that the US military will form a new force with the UK, Bahrain, Canada, France, Italy, the Netherlands, Norway, Seychelles, and Spain to protect ships in the region.

MSC, Maersk, Hapag Lloyd, CMA CGM, Yang Ming Marine, and Evergreen have all stated that they will immediately change all planned itineraries to ensure the safety of their crew and vessels. These shipping companies account for about 60% of global trade.

Evergreen also stated that it will temporarily stop accepting any cargo bound for Israel and suspend shipping services to Israel. Orient Overseas Container Line (OOCL), a subsidiary of China COSCO Shipping Group, has also stopped accepting Israeli cargo citing operational issues.

Yoni Essakov, a member of the Israel Shipping Chamber Executive Committee, said, "About 30% of Israel's imported goods are transported by container ships in the Red Sea. These container ships have already booked consumer goods or other products two to three months in advance. This means that if the current voyage is extended, products with a shelf life of two to three months will not be worth importing from the Far East."

"Due to the uncertainty, importers will need to increase inventory and pay higher prices, while other importers will lose market share because their entry into the market is not competitive," Essakov added.

On Monday, oil giant BP announced that it will also suspend its shipping activities in the Red Sea due to ongoing attacks by Houthi militants based in Yemen.

In a statement, the company said, "The safety and security of our employees and those working on our behalf are our top priority. Given the deteriorating security situation in Red Sea shipping, BP has decided to suspend all transportation through the Red Sea." "We will maintain this precautionary suspension while monitoring developments in the region."

Tanker group Frontline has also stated that it is avoiding the Red Sea.

The attacks have pushed up shipping costs. Since the start of the Israel-Hamas war, tensions between Asia and the United States have been high. According to data from Freightos, prices on the East Coast have risen by 5% to $2,497 per 40-foot container. As major companies avoid the Suez Canal route to the Red Sea and instead opt for the longer route around Africa into the Indian Ocean, costs may be even higher.

As a result, a shipping route takes an additional 14 days, leading to increased fuel costs. The longer time it takes for ships to reach their destinations has resulted in what is perceived as "tight ship capacity." Delays in the delivery of containers and goods are inevitable. According to Michael Aldwell, Executive Vice President of Ocean Logistics at Kuehne+Nagel, container shipping accounts for nearly one-third of the global transportation volume, with an estimated cargo value of $10 trillion.

"Around 19,000 ships pass through the Suez Canal each year," Aldwell said. "The expected increase in transit time will absorb 20% of the global shipping capacity, potentially causing delays in the availability of shipping resources."

He added that the return of empty containers to Asia will also experience delays, further exacerbating the challenges in the supply chain.

Moody's highlighted these delays in a report to its clients.

Daniel Harlid, Senior Credit Officer at Moody's, wrote, "If this situation persists for more than a few days, it will have a positive credit impact on container shipping, tankers, and dry bulk markets." "But it also increases the risk of further disruptions in the supply chain."

Insurance companies are also changing their stance, which may result in increased costs passed on to shippers and consumers. The Joint War Committee (JWC), composed of members from the Lloyd's Market Association and representatives from the London insurance market, stated that it is expanding its high-risk area from 15 degrees north latitude to 18 degrees north latitude.

Neil Roberts, Director of Maritime and Aviation at the Lloyd's Market Association, said, "The listed area in the Red Sea has been extended northward by 3 degrees to account for the missile range in Yemen. This reflects a dynamic and evolving situation, and shipowners have recognized the development of the situation and announced significant rerouting."

The Red Sea and the southern part of the Gulf of Aden have been included in the list by the Joint War Committee, as both areas have required notification of navigation since 2009. The decision to expand the high-risk area affects insurers' considerations of premiums.

Changes in shipping routes may also harm Egypt's already struggling economy, as the country's tourism industry has been affected by the wars between Israel and Hamas. Egypt owns, operates, and maintains the Suez Canal. The Suez Canal Authority reported record revenue of $9.4 billion in the 2022-23 fiscal year.