Container shipping giant Maersk is diverting its vessels around Africa instead of using the Red Sea and the Suez Canal for the “foreseeable future” following attacks by Houthi rebels based in Yemen which have triggered a rise in marine insurance costs.

Maersk has been joined in halting use of the Suez Canal by the Swiss-based MSC and French shipping group CMA CGM while German container line Hapag Lloyd has said it may follow suit.

The Suez Canal is the main route for about 12 percent of world trade according to the International Chamber of Shipping. The Red Sea connects the Mediterranean to the Indian Ocean and Europe to Asia.

London's marine insurance market has widened the area in the Red Sea it deems as high risk after a surge in attacks on commercial ships with reports that war risk premiums have risen to around 0.5%-0.7% of the value of a ship from 0.07% in early December.

The Maersk decision follows an attack on one of its ships, the Singapore-flagged Maersk Hangzhou, by Houthi, and has since begun redirecting ships. The company also rerouted four out of five southbound container vessels already passing through the Suez Canal back north for the long journey around Africa.

The trip around Africa can add about 10 days to journey times and requires more fuel and crew time, increasing shipping costs. Maersk said: “We have therefore decided that all Maersk vessels due to transit the Red Sea/Gulf of Aden will be diverted south around the Cape of Good Hope for the foreseeable future.”

Since November, at least 25 commercial vessels operating in the southern Red Sea and the Gulf of Aden have been attacked.

Last month, the United States launched a multinational operation to safeguard commerce in the Red Sea. However, due to continued attacks, many shipping companies are still diverting vessels around Africa.

“The situation is constantly evolving and remains highly volatile, and all available intelligence at hand confirms that the security risk continues to be at a significantly elevated level,” added Maersk.

The Houthis have said they are targeting vessels linked to Israel in the Red Sea shipping lane in solidarity with Palestinians due to the ongoing war in Gaza.

Their actions are now impacting one of the world's most important routes for global seaborne commodity shipments, particularly crude oil and fuel from the Gulf bound for the Mediterranean via the Suez Canal or the nearby SUMED pipeline, as well as commodities heading eastward for Asia, including Russian oil.

W Denis arrange specialist (re)insurances for organisations involving in the marine and other offshore industries including energy, shipping, cargo and transportation operations. For more information visit www.wdenis.eu or contact :

Eastern Europe

Vida.Jarasiunaite@wdenis.eu

Southern Europe

Christos.Hadjisotiris@wdenis.com

Western Europe &/or elsewhere worldwide

Mark.Dutton@wdenis.com