Houthi Threats Send Ships Around Africa

The Red Sea is again becoming a route ships would rather avoid. Tankers and container vessels facing Houthi threats against Saudi-bound shipping are turning away from the Bab el-Mandeb, the narrow strait at the southern mouth of the Red Sea, and going the long way around Africa's Cape of Good Hope (in.gr).

For Europe, including Ireland at the far end of the supply chain, that means the same goods leaving Asian factories are spending longer at sea before they reach European ports. The cost is already visible in freight rates, fuel bills and insurance. It reaches shop shelves more slowly, because every company along the chain first has to decide whether to swallow the increase or pass it on.

Extra miles, fewer ships

A ship avoiding the Bab el-Mandeb has to sail roughly 3,000–3,500 extra nautical miles around Africa (Forbes). On a typical Asia-Europe container route, that adds 10–14 days (Nation Thailand). For oil tankers travelling from the Persian Gulf to Rotterdam, the journey nearly doubles, rising from about 20 days to more than 35 (xpert.digital).

The obvious cost is fuel. The less obvious one is capacity. Shipping supply is not simply the number of vessels on the water; it is the number of journeys those vessels can complete. If every round trip takes two weeks longer, the same fleet carries less cargo over the same period. One estimate puts the capacity absorbed by Cape detours at about 2.5 million TEU, the standard container measure based on a twenty-foot box (Maritime Professional).

Where the money goes

Once capacity tightens, freight rates move. China-to-Italy container freight has risen 20%, with further surcharges expected (Shipping Italy). Hapag-Lloyd, one of Europe's largest container lines, has reported crisis-related costs of $50–60 million per week from extra fuel, insurance and port storage (drweb.de).

Insurance is the next charge. War-risk premiums, the extra price shipowners pay for sending a vessel through an attack zone, have climbed to about 0.3–0.75% of hull value after renewed Houthi threats (Whalesbook, Hyperexponential). For a vessel insured at $100 million, a rise from 0.3% to 0.7% means roughly $700,000 extra per transit (Indoneo). These contracts are negotiated privately, so the precise figures differ from ship to ship, but the direction is clear.

The first bill lands with carriers, charterers and insurers. They try to recover it through surcharges and new contract terms. Importers then feel the delay: goods are paid for earlier, sold later, and sit as capital trapped at sea. The final step comes only when manufacturers and retailers decide whether to absorb the pressure or raise prices.

Italy pays more, Denmark earns more

That is why this does not look like an immediate consumer-price shock. German logistics sources are reporting higher transport costs, but say supply shortages, factory stoppages and depleted inputs have not yet materialised (VerkehrsRundschau). There is also no official euro-area data isolating how much current inflation comes from the Red Sea disruption (ECB).

The burden falls unevenly. Italy moves about 25% of its trade by value and 49% by volume by sea, leaving it among Europe's more exposed economies (Canale Energia). Italian SMEs with thin cash reserves are at the sharp end, paying more for Chinese imports while perishable exports such as kiwis and apples lose margin on longer journeys (Legacoop Agroalimentare).

Denmark sees the other side of the same story. Maersk's earnings rise and fall with container-rate swings (Euroinvestor). Greek shipowners gain from the same mechanism, because higher charter rates reward vessel owners even as ports dependent on transit volumes risk losing throughput.

Across Europe, the split is familiar: large carriers and shipowners have pricing power; smaller importers and manufacturers have far less. The logistics tax falls hardest on firms that cannot easily renegotiate contracts, build buffer stock or switch suppliers. The increase is already documented in freight markets, insurance pricing and fuel bills. The unresolved question is how long smaller firms can keep absorbing it before they raise prices, delay orders or lose margin.