Sources in the shipping industry told Reuters on Thursday they are “in the dark” about the Biden administration’s new Operation Prosperity Garden, a multinational effort to protect Red Sea shipping from terrorist attacks by the Iran-backed Houthi terrorists of Yemen.
Most cargo operations are still suspending operations in the Red Sea or routing their ships around the Cape of Good Hope, adding ten days of sailing time and huge additional costs to their shipments.
“There are still a number of unknowns with the coalition. We don’t know exactly how many warships will be involved, how long it will take those vessels to get to the region, or their rules of engagement and the actual protection scheme that will be put in place,” said Corey Ranslem, CEO of Dryad Global, a British maritime consultant.
“Globally this is a fairly small area, however providing protection to commercial vessels in this region could be a major undertaking depending on the number of vessels along with any changes to the Houthi tactics,” he said.
Ranselm said he expected even more shipping companies to begin “diverting around Africa or completely pausing operations” if they are not reassured the new security coalition can guarantee their safety.
Overall traffic through the Red Sea is already down by about 14 percent. One of the major shipping companies, Hapag Lloyd of Germany, said it will continue rerouting traffic away from the waters around Yemen until at least December 31. Other cargo companies are reportedly willing to dare the Red Sea, but only with hefty risk premiums and promises they will be reimbursed for losses from Houthi attacks.
Israel’s Eliat Port on Thursday reported an astounding 85-percent decrease in activity since the Houthis began attacking Red Sea shipping. Eilat is particularly dependent on shipping from the Bab el Mandeb Strait, the area most heavily disrupted by the Houthis.
“If God forbid, the coalition countries and Israel lag in finding a solution for the Houthis, unfortunately we will likely have to furlough workers,” said Gideon Golber, chief executive of Eliat Port.
Another source in the shipping industry told Reuters that big companies are waiting to see how large the Operation Prosperity Guardian task force becomes and exactly what its warships are prepared to do.
“Will they do anything except swat the missiles out of the sky? If that’s all, then will it give the assurances that are needed for shipping companies? We don’t know yet. The market needs to see it have some success or concrete action,” the source said.
The Biden administration was extremely slow to respond to escalating Houthi piracy, even after the insurgents openly declared their intention to attack all ships owned by Israel or headed to Israeli ports, in flagrant defiance of international law. The Houthis soon escalated to attacking ships that lacked even the most tenuous connection to Israel.
For weeks, the administration insisted it was putting together a broad-based international coalition to protect freedom of navigation in the Red Sea. After a weekend in which oil giant BP and several large shipping companies announced they no longer felt it was safe to sail through the Red Sea and Bab el Mandeb Strait to the Suez Canal, movement toward finalizing the security alliance seemed to accelerate. Sources in Italy told the media on that same weekend they had been invited to join the coalition. Italy was included in the list of nations furnished by Austin in his announcement on Monday.
Greece said on Thursday it will dispatch a single frigate to “participate in the multinational operation” for “the protection of merchant ships, the lives of seafarers, [and] the global economy.”
Conspicuously absent from the list were Egypt and Saudi Arabia, two regional heavyweights with clear interests in protecting the shipping lanes threatened by the Houthis. Egypt, whose economy is already in poor shape, stands to use vast amounts of income as Suez Canal traffic dwindles, while Saudi Arabia has been fighting the Houthis in Yemen since 2015, and a third of its imports flow through Red Sea ports.
Saudi Arabia and its ally, the United Arab Emirates, were not among the announced members of Operation Prosperity Guardian, but U.S. officials have avoided saying they will not be invited, or would refuse to join.
“I would let every nation who is a member, whether they want it acknowledged or not, speak for themselves,” White House National Security Council spokesman John Kirby said at a press conference on Tuesday, bluntly refusing to answer a question about Saudi Arabia’s participation in Operation Prosperity Guardian.
Two Persian Gulf sources told Reuters the Saudis will stay out of the fight because they want to disengage from Yemen, they want to avoid antagonizing Iran after their Chinese-brokered reconciliation in March, they think a fresh war in Yemen could destabilize the entire region, and they fear “Arab anger over Gaza” could turn against them.
The Iranian regime has expressly threatened to frame any Arab country that joins the U.S.-led coalition as a traitor to Islam and the Palestinian cause, a “direct participant in the killing of children by the Zionist regime.”
Other analysts suggested the Saudis are still miffed at Biden, who campaigned for office on a promise to turn Saudi Crown Prince Mohammed bin Salman into a global “pariah,” and they are reluctant to support any initiative that would increase the U.S. footprint in the Middle East.
“The war has chilled Emirati ties with Israel, derailed Saudi-Israeli normalization talks and made any embrace of U.S. policy an uncomfortable prospect for Arab leaders,” Reuters observed.
Even less has been said in public about Egypt’s absence from the Red Sea coalition, which is probably driven by many of the same factors. Recently re-elected Egyptian President Abdel Fattah el-Sisi has been a fierce critic of Israel’s operation in Gaza, in part because he worries the conflict could drive a wave of Palestinian refugees into Egypt.
Arab News reported that Egyptian Foreign Minister Sameh Shoukry discussed Red Sea security issues in a quiet phone call with Secretary of State Antony Blinken on Tuesday night.
Shoukry reportedly told Blinken that Egypt sees “the need to provide safe navigation for commercial vessels in the Red Sea, a shipping lane vital to global trade.” There was no indication from the readout of this call that Egypt intends to provide any of that security.
Voice of America News (VOA) on Wednesday quoted logistics consultants who are telling their clients to brace for at least 90 days of shipping disruptions in the Red Sea, which is not a vote of confidence for the success of Operation Prosperity Guardian.
Some of these consultants are telling shippers to consider “intermodal transport,” which means using multiple shipping methods to avoid the traditional Red Sea-Suez Canal route, including expensive air transportation for the most hotly demanded goods.
“Moving goods by air costs roughly 5-15 times more than by sea, where container shipping rates are still low by historical standards,” Brian Bourke of SEKO Logistics told VOA.
Bourke said his clients are inquiring about air transportation despite its expense, and he expected more companies to take the hit if Houthi disruptions cause normal shipping times through the Red Sea to increase by 100 percent or more. Time is of the essence because China will close its production lines for a week to celebrate Lunar New Year in February.
“Under an extended threat you will see the price of fuel and goods into Europe increase substantially because of the increased costs of diverting around Africa which can add roughly 30 days to a transit depending on the arrival port,” warned Corey Ranselm of Dryad Global, who was also quoted in the VOA piece.
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