In a small stretch of ocean in the Middle East, trouble is brewing – and for a tea company halfway across the world in Reading, that's a real cause for concern.
Products are out of stock, and customers are increasingly frustrated with delays in their orders.
The reason is attacks launched by a group of Yemeni rebels, the Houthis, who oppose American and Israeli influence in the Middle East and, as a result, support Hamas in its war against Israel.
In a show of support for Hamas, they targeted commercial cargo ships traveling along one of the world's busiest shipping lanes: the Red Sea.
Tea People, an award-winning luxury tea social enterprise, was expecting delivery on 13 December, but it had to be rerouted an additional 3,500 miles and barely arrived in time for the Christmas trade. Another shipment was supposed to arrive on December 15, but has not yet arrived at a UK port.
There are a number of products out of stock
Their costs have also quadrupled, said Vishaka Chhetri Agarwal, chief production officer: “For a container, if you pay $1,000 to ship it from Sri Lanka to the UK, suddenly we now have to pay $5,000.”
While they try to absorb the price increase, “if this continues for much longer, we will have to increase costs.”
But it's not just tea lovers who are affected, with UK consumers facing a range of delays in their daily products due to the conflict in the Red Sea.
Vishaka Chhetri Agarwal
How did the Red Sea become a battlefield?
Global shipping has become a target During the The war between Israel and Hamas Which, like the Houthis, is supported by Iran.
the Dramatic hijacking of a cargo ship November 19 marked one of the most significant attacks launched by Yemen's Houthis in the Red Sea.
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The Houthis seize an “Israel-linked” ship in the Red Sea
Since then, the Iran-aligned Houthis who control much of Yemen have launched drones and ballistic missiles at more than 20 ships. They said they were targeting ships with Israeli ties or those sailing to Israel.
“Even at the beginning they had a very broad definition of what ‘belonging to Israel’ meant,” John Staubert, of the International Chamber of Shipping, told Sky News. “What we are seeing now is an incredibly general and general threat to global trade.” “.
Between November 19 and January 2, 47 incidents were reported in the Red Sea and Gulf of Aden, according to marine risk management group Embry Analytics.
Incidents reported in the Red Sea and Gulf of Aden from 19 November 2023 to 2 January 2024
This includes the seizure of the Galaxy Leader – a Japanese-operated cargo ship linked to an Israeli company, which the Houthis seized with its crew in the southern Red Sea in November.
Twelve of the 47 reported incidents involved bodily harm, according to Embry Analytics. While the attacks have been ongoing since November, their impact is also being felt politically.
On December 13, the British warship HMS Diamond shot down an attack drone suspected of targeting commercial ships in the Red Sea. The Ministry of Defense said it was the first time in decades that the Royal Navy had fired on an air target in anger.
A Houthi fighter stands on the cargo ship Galaxy Leader on November 19
The United States also repelled a Houthi attack on the Maersk container ship in the Red Sea, sinking three ships and killing 10 militants on December 31.
But the UK is not alone in its deterrence efforts. In December, a US warship shot down three more drones.
In response, the United States and 12 other countries, including the United Kingdom, formed a naval task force, called Operation Prosperity Sentinel, to protect civilian ships.
Experts warned that the situation could escalate, as the West tries to balance deterrence with the desire to use that capability.
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“The United States, as well as the rest of the international community, has tried to avoid inflicting real costs on the Houthis,” said Raphael Cohen, director of the Strategy and Doctrine Program at the RAND Air Forces Project.
“And there are good reasons for that. There was kind of an initial ceasefire in the Yemeni civil war. We don’t really want to reignite that.”
But he said it was still “possible that the conflict could spread.”
He added: “The United States and its allies are torn between the goals of suppressing regional tensions, and this generally means using less force. But on the other hand, the status quo that attacks international shipping is unacceptable.”
The cargo ship Galaxy Leader is escorted by Houthi boats in the Red Sea in November
From cars to toys: goods are being redirected
The cost of escalating tensions in the Red Sea is not just political, but commercial.
“The Houthis will bear responsibility for the consequences if they continue to threaten lives, the global economy and the free flow of trade in the region’s vital waterways,” the UN Security Council said in a statement issued on December 1.
Next is among the latest retailers to warn of possible stock delays Due to increasing tensions in the stretch of water. BMW, Ikea and Nestle are also believed to have been affected after several shipping companies – including Maersk and Hapag Lloyd – suspended their cruises through the region.
Confirming the delay in some of its products, IKEA said that its main priority is “the safety of people working in the IKEA value chain” and that it will take all necessary precautions to keep them safe.
About 12% of global trade, and 40% from Europe to Asia, passes through the Red Sea and the Suez Canal.
Now shipping companies have rerouted via the Cape of Good Hope, a journey that takes on average 10 days longer and costs around £1.6 million in fuel and other costs.
About 300 ships have been rerouted so far, according to data from Windward, a maritime artificial intelligence company, 45 of which were carrying nearly 79 million pounds each in new vehicles from Korea and Japan.
The company said nearly £3.55 billion worth of new cars were sent on the longer, more expensive route, and found that the average increase in the price of each individual car as a result was £866.
Data: WindWard
Nearly 48% of gaming in Europe comes via this route as well, said Ami Daniel, founder and CEO of WindWard.
“Consumer goods are the ones that took the biggest hit — and when I say consumer goods, that's your IKEA tables, your kids' toys and everything you buy in the store.”
The unfolding conflict is also personal for Daniel – he was on a ship that was hit by a missile off the coast of Lebanon in 2008. Four of his fellow Israeli naval personnel died and 12 others were injured.
“I know exactly what it's like to be at the end of that rocket,” he told Sky News. “These missiles can completely sink ships and kill sailors and captains.”
A Houthi military helicopter flies over the cargo ship Galaxy Leader in the Red Sea
Could trade stop using the Red Sea entirely?
Staubert, senior director of environment and trade at the International Chamber of Shipping, says there is a risk of “massive losses”, but this is unlikely to turn into a scenario in which no trade at all uses the route.
“Shipping is very resilient and we have faced a lot of security threats before,” he said. “Shipping always manages to find a way.”
But these large commercial shipping containers are more likely to be converted because “larger ships represent a more viable target than a vessel with a low free deck such as [an oil] Tanker.”
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How are the Houthi rebel attacks affecting the world?
In July 2021, a container ship remained stuck in the Suez Canal for nearly a week, significantly disrupting global trade. But Staubert says this level of lockdown is unlikely to happen again.
“You will see an impact, but it will not be as profound as Evergiven. At the same time, it is important to realize that without this control your prices will rise – it is a vital trading line between two very massive markets.”
“Uncertainty creates costs.”
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