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The U.S. and other countries have formed a naval taskforce to protect commercial vessels traveling though the Red Sea from Houthi rebel attacks.
The escalating attacks have damaged ships and threatened crew safety, forcing shipping companies to stop their vessels from entering the Bab el-Mandeb Strait until security improves.
The Bab el-Mandeb Strait, which connects the Red Sea to the Gulf of Aden, is a key shipping passage that facilitates a sixth of the world’s trade.
“This is an international challenge that demands collective action,” U.S. Defense Secretary Lloyd Austin said in a statement when announcing the taskforce Operation Prosperity Guardian.
Other countries in the coalition are the U.K., Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles and Spain.
Under the new mission, military ships in the region will be positioned in a way that would provide umbrella protections to as many vessels as possible, an unnamed military official told Associated Press.
The attacks have forced companies to pause shipping through the Red Sea, including BP (BP), Swiss-based MSC, France’s CMA CGM, Denmark’s Maersk (OTCPK:AMKBY), Germany’s Hapag-Lloyd (OTCPK:HPGLY), and Hong Kong-based OOCL (OTCPK:OROVY).
The attacks have lifted ocean freight rates, as shipping companies avoid the Suez Canal and instead go around Africa to reach the Indian Ocean. This adds up to 14 days to the journey, driving fuel costs higher, and increases carbon charges due to more emissions.
“The global oil tankers industry has mostly included the longer route of Cape of Good Hope as an option to move cargoes to Europe from the Persian Gulf and the Red Sea, which if exercised can push up the freight by over 10% in the near term and even much higher over the next few months,” according to S&P Global Commodity Insights.
The additional war risk premium for passing through the Gulf of Aden has also been raised 6-10 times in the last two months.