Indiegogo has just introduced a Shipping Guarantee program to assure buyers they’ll get their products. Previously, there was no guarantee that you would receive the product you backed, but things are now changing. The program will be open to companies that have a reliable track record on the crowdfunding platform. Having a history of successful campaigns will help increase the chances of being approved for the program. The program is a step up from the “Trust-Proven” badge from two years ago, which indicates consistent fulfillment, positive backer ratings and proof of exemplary campaign management.
According to Indiegogo’s Shipping Guarantee Program FAQ page, a campaign must be vetted by the platform’s Trust & Safety team to qualify. All products must also be in the “final manufacturing stages.”
The first campaign under this program is the HoverAIR X1 PRO and X1 PRO MAX flying action cameras. As seen on the campaign’s product page, there is a “Shipping Guarantee” badge. Those who back the project will get their money back if the drones don’t ship by October 31, 2024.
Note that backers are required to fill out surveys sent out by campaign owners to qualify for the protection program. So, don’t complain if you simply forgot to fill out your shipping information — you’ll be on your own unless customer service helps you.
I once backed the Status Audio Between Pro earbuds years ago, and while they arrived safely, the many stories of failed campaigns from over the years have kept me (and surely other potential buyers) wary. Since Indiegogo only ensures reliable companies have access to the Shipping Guaranteed program, backers could be more confident if a company misses its shipping goals.
The main shipping channel into Baltimore’s port has fully reopened to its original depth and width following the March 26 collapse of the Francis Scott Key Bridge, which blocked most maritime traffic into the harbor.
Officials announced the full reopening in a news release Monday evening. It comes after a massive cleanup effort as crews removed an estimated 50,000 tons of steel and concrete from the Patapsco River.
The channel was blocked by wreckage of the fallen bridge, which collapsed after a container ship lost power and crashed into one of its supporting columns, sending six members of a roadwork crew plunging to their deaths. All of the victims were Latino immigrants working an overnight shift to fill potholes on the bridge.
The Port of Baltimore, which processes more cars and farm equipment than any other in the country, was effectively closed for several weeks while the wreckage was removed. Crews were able to reopen portions of the deep-draft channel in phases, restoring some commercial traffic in recent weeks.
On May 20, the wayward cargo ship Dali was refloated and guided back to port. The vessel had been stuck amid the wreckage for almost two months, with a massive steel truss draped across its damaged bow.
After the Dali was moved, crews opened a channel that was 50 feet (15 meters) deep and 400 feet (122 meters) wide. The full federal shipping channel is 700 feet (213 meters) wide, which means two-way traffic can resume, officials said. They said other additional safety requirements have also been lifted because of the increased width.
Thousands of longshoremen, truckers and small business owners have seen their jobs impacted by the collapse, prompting local and state officials to prioritize reopening the port and restoring its traffic to normal capacity in hopes of easing the economic ripple effects.
The announcement Monday means the commerce that depends on the busy port can begin ramping back up.
Officials said a total of 56 federal, state and local agencies participated in the salvage operations, including about 500 specialists from around the world who operated a fleet of 18 barges, 22 tugboats, 13 floating cranes, 10 excavators and four survey boats.
“I cannot overstate how proud I am of our team,” said Col. Estee Pinchasin, Baltimore district commander for the Army Corps of Engineers. “It was incredible seeing so many people from different parts of our government, from around our country and all over the world, come together in the Unified Command and accomplish so much in this amount of time.”
In a statement Monday, Pinchasin also acknowledged the loss of the victims’ families.
“Not a day went by that we didn’t think about all of them, and that kept us going,” she said.
The Dali lost power shortly after leaving Baltimore for Sri Lanka in the early hours of March 26. A National Transportation Safety Board investigation found it experienced power outages before starting its voyage, but the exact causes of the electrical issues have yet to be determined. The FBI is also conducting a criminal investigation into the circumstances leading up to the collapse.
Officials have said they hope to rebuild the bridge by 2028.
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The ballistic missile hit the Rubymar on the evening of February 18. For months, the cargo ship had been shuttling around the Arabian Sea, uneventfully calling at local ports. But now, taking on water in the bottleneck of the Bab-el-Mandeb Strait, its two dozen crew issued an urgent call for help and prepared to abandon ship.
Over the next two weeks—while the crew were ashore—the “ghost ship” took on a life of its own. Carried by currents and pushed along by the wind, the 17-meter-long, 27-meter-wide Rubymar drifted approximately 30 nautical miles north, where it finally sank—becoming the most high-profile wreckage during a months-long barrage of missiles and drones launched by Iranian-backed Houthi rebels in Yemen. The attacks have upended global shipping.
But the Rubymar wasn’t the only casualty. During its final journey, three internet cables laid on the seafloor in the Bab-el-Mandeb Strait were damaged. The drop in connectivity impacted millions of people, from nearby East Africa to thousands of miles away in Vietnam. It’s believed the ship’s trailing anchor may have broken the cables while it drifted. The Rubymar also took 21,000 metric tons of fertilizer to its watery grave—a potential environmental disaster in waiting.
An analysis from WIRED—based on satellite imagery, interviews with maritime experts, and new internet connectivity data showing the cables went offline within minutes of each other—tracks the last movements of the doomed ship. While our analysis cannot definitively show that the anchor caused the damage to the crucial internet cables—that can only be determined by an upcoming repair mission—multiple experts conclude it is the most likely scenario.
The damage to the internet cables comes when the security of subsea infrastructure—including internet cables and energy pipelines—has catapulted up countries’ priorities. Politicians have become increasingly concerned about the critical infrastructure since the start of the Russia-Ukraine war in February 2022 and a subsequent string ofpotential sabotage, including the Nord Stream pipeline explosions. As Houthi weapons keep hitting ships in the Red Sea region, there are worries the Rubymar may not be the last shipwreck.
The Rubymar’s official trail goes cold on February 18. At 8 pm local time, reports emerged that a ship in the Bab-el-Mandeb Strait, which is also known as the Gate of Tears or the Gate of Grief, had been attacked. Two anti-ship ballistic missiles were fired from “Iranian-backed Houthi terrorist-controlled areas of Yemen,” US Central Command said. Ninety minutes after the warnings arrived, at around 9:30 pm, the Rubymar broadcast its final location using the automatic identification system (AIS), a GPS-like positioning system used to track ships.
As water started pouring into the hull, engine room, and machinery room, the crew’s distress call was answered by the Lobivia—a nearby container ship—and a US-led coalition warship. By 1:57 am on February 19, the crew was reported safe. That afternoon, the 11 Syrians, six Egyptians, three Indians, and four Filipinos who were on board arrived at the Port of Djibouti. “We do not know the coordinates of Rubymar,” Djibouti’s port authority posted on X.
Satellite images picked up the Rubymar, its path illuminated by an oil slick, two days later, on February 20. Although the crew dropped the ship’s anchor during the rescue, the ship drifted north, further up the strait in the direction of the Red Sea.
In the early hours of Tuesday morning, the global supply chain and US coastal infrastructure collided in the worst possible way. An enormous container ship, the Dali, slammed into a support of the Francis Scott Key bridge in Baltimore, crumpling its central span into the Patapsco River and cutting off the city’s port from the Atlantic Ocean. Eighteen hours later, at approximately 7:30 pm Tuesday evening, rescuers called off the search, with six missing people presumed dead.
With the wreckage yet to be cleared, the Port of Baltimore—a critical shipping hub—has suspended all water traffic, according to the Maryland Port Administration, though trucks are still moving goods in and out of the area. Baltimore is the ninth busiest port in the US for international trade, meaning the effects of the crash will ripple across the regional, US, and even global economy for however long the 47-year-old bridge takes to fix—a timeline, experts say, that’s still unclear.
This will be a special pain for the auto, farm equipment, and construction industries, because Baltimore handles the most “roll on, roll off” ships on the US east coast—an industry term for those designed to handle wheeled cargo. The port has the special equipment to move these products, workers trained in how to use it, and, critically, a location within an overnight driving distance of the densely populated Eastern Seaboard and heavily farmed Midwest.
Almost 850,000 cars and light trucks came through the port last year. So did 1.3 million tons of farm and construction machinery.
Fortunately for the logistics industry, there are some alternative routes both for ships coming into port and trucks crossing the river. Two tunnels traverse the Patapsco, and could take some of the goods and people that once traveled across the Key Bridge, which was also part of Maryland Route 695. Nearby ports, including Norfolk in Virginia, Philadelphia in Pennsylvania, and Savannah in Georgia, should be able to accept many of the goods usually handled by Baltimore’s port.
But the shipping picture will get more complicated the longer the disaster takes to resolve. Ships haul big, heavy goods in large quantities across oceans, albeit relatively slowly—meaning changes to their routes and destinations can add a lot of time to a journey. If a ship is hauling a bunch of different cargos for a bunch of different industries, a holdup along the way causes a lot of people to be screaming for their supplies.
“Everybody right now is saying, ‘We’re just going to reroute, it’s going to be fine,’” says Nada Sanders, an expert in supply chain management at Northeastern University. “If this lasts a while, it’s not going to be fine. It’s going to impact prices.”
Bigger Ships, Same Bridge
The destruction of the bridge also underlines that boats are getting bigger. Trade transport volume across the seas has tripled in the last three decades. At nearly 1,000 feet long, the Dali is emblematic of the ballooning shipping industry.
The growth of boats is down to simple economics: The more goods you can cram on a ship, the more you save on costs. “The amount of cargo has increased tremendously,” says Zal Phiroz, a supply chain analyst at the University of California, San Diego. “This has been impacted to a great degree by Covid, and after Covid as well. The prices of cargo skyrocketed, the prices of containers skyrocketed. Everything just went through the roof.”
PUNTLAND, SOMALIA – JANUARY 29: Puntland Maritime Police Forces (PMPF) are patrolling against the recently increasing pirate attacks off the coast in Puntland, Somalia on January 29, 2024. (Photo by Abuukar Mohamed Muhidin/Anadolu via Getty Images)
Anadolu | Anadolu | Getty Images
Somali pirates are back on the attack, with piracy around the Horn of Africa rising sharply in recent months and adding to concerns for shipping vessels, government forces and private security already locked in a battle in the Red Sea with Houthi rebels.
Over the past three months, there has been more piracy in the Horn of Africa region than at any point in the last six years, according to Royal United Services Institute (RUSI), an independent think tank, with high ransoms for seafarers or vessels, and robbing of ship passengers by pirates.
Piracy off the coast of Somalia had been on the decline in recent years after peaking in 2011 when Somali pirates launched 212 attacks. The United Nations Security Council (UNSC) passed seven resolutions targeting Somalia piracy between December 2010 and March 2022, permitting foreign naval and air forces to enter and patrol Somali waters and authorizing the European Union Naval Force Operation Atalanta, working with a U.S.-led task force, to use “all necessary means to repress piracy and armed robbery at sea.”
The cost of piracy to the global economy is a steep one. A 2013 World Bank study, still widelt cited today, estimated that piracy cost the global economy around $18 billion annually.
According to the UNSC, the anti-piracy measures in place to enforce the freedom of navigation off the coast of Somalia expired quietly after its last renewal for three months after December 3, 2021.
Since last November, merchant vessels have been the target of about 20% of Somali piracy-related incidents, according to Dan Mueller, lead analyst for the Middle Eastern Region for maritime security firm Ambrey. On December 14, The International Chamber of Shipping reported the hijacking of a Handymax bulk carrier, the first successful hijacking of a vessel off the coast of Somalia since 2017. The pirates have also been attacking fishing vessels, mostly Iranian, as well as many other small boats such as skiffs.
Ocean piracy is rising across the world
Data from 2023 shows that by many key measures, piracy is on the rise in key global shipping lanes.
There were 120 incidents of maritime piracy and armed robbery against ships reported in 2023, compared to 115 in 2022, according to the annual Piracy and Armed Robbery Report of the ICC International Maritime Bureau (IMB). The IMB also found increased threats to crew safety, with the number of crews taken hostage rising from 41 to 73 in 2023, and crews kidnapped from two to 14.
A spokesperson for the International Maritime Organization (IMO) which represents the seafarer spokesperson stressed to CNBC in an email, “The entire world depends on international shipping and seafarers, and therefore ships and cargoes should not be the subject of any type of attacks. The safety of seafarers are paramount – they are innocent victims who are simply doing their jobs in very harsh conditions.”
The UNSC did not respond to CNBC’s request for comment about reinstating anti-piracy resolutions related to Somalia.
The IMO said it is working very closely with countries in the region through the Djibouti Code of Conduct to address piracy and avoid any escalation, through capacity-building, national legislation, information sharing and regional coordination.
“We are also looking the possibility of updating the IMO guidance on piracy to take into account new threats and technologies that can affect the safety of seafarers,” said a spokesperson.
A 2010 photo of an armed Somali pirate keeping vigil on the coastline at Hobyo, northeastern Somalia, while the Greek cargo ship, MV Filitsa is anchored just off the shores of Hobyo where it was held by pirates after beimng captured some 513 nautical miles northeast of the Seychelles as it was sailing from Kuwait to Durban in South Africa loaded with fertilizer.
Mohamed Dahir | Afp | Getty Images
According to maritime security firm Dryad Global, shipping from the coast of the Horn of Africa to the coast of India is considered a “high risk zone.” There are 25 countries in the region with their naval forces, but given the size of the area, the numbers are not a sufficient guarantee of safe navigation.
A slight increase in piracy has also been recorded in the Gulf of Guinea on Africa’s West Coast, where 22 piracy incidents were recorded in 2023, compared to 19 in 2022, 35 in 2021, and 81 in 2020. According to the IMB, these waters accounted for three of the four globally reported hijackings, all 14 crew kidnappings, and 75% of reported crew hostages and two injured crew in 2023.
The Singapore Straits are another area of concern due to the high number of incidents in the region. While the IMB considers these incidents low-level opportunistic crimes, 95% of the reported incidents were successful.
“Crew continue to be harmed with nine taken hostage and two threatened. Guns were reported in three recorded incidents and knives in 15,” the IMB report noted.
Maritime security efforts
To help deter piracy and enhance maritime security, vessels deploy what’s called Best Management Practice (BMP) 5 when operating in the Red Sea, Gulf of Aden, Indian Ocean, and Arabian Sea.
“Private armed security teams have proven effective alongside BMP 5 measures,” Mueller said. “An adequate citadel has proven vital to enable the crew to remain safe until military responses can be coordinated.”
Citadels are a pre-determined fortified area on a vessel built to resist pirates from gaining entry for a period of time to protect a crew.
Dozens of companies in the maritime security space could see an increase in their business as the threats against commercial shipping widen. The size of the maritime safety market has grown to keep up with the flow of trade and will grow from $19.85 billion in 2023 to $21.18 billion in 2024, according to ResearchAndMarkets.com, and is forecast to reach $25.93 billion in 2028 at a compound annual growth rate of 5.2%. The list of major companies operating in the market of maritime safety systems includes several niche players as well as major industrials and defense contractors, such as Raytheon, Honeywell International, Elbit Systems Ltd., L3Harris Technologies, Lockheed Martin, and General Dynamics Corporation.
Mueller said the Indian Navy and Coast Guard along with the EU Operation Atalanta and national counter-piracy missions are active in the region where Somali pirates have attacked.
“Indian forces have successfully operated against PAGs [pirate action group] in four boarding incidents,” he said.
U.S. and allied defense
On February 1, the Biden Administration approved a $3.99 billion sale of drones and military equipment to India to be used to augment its maritime safety and surveillance. Included in the sale, according to the State Department: 31 Sky Guardian drones, 310 small-diameter bombs, 170 Hellfire missiles, and other related support equipment.
A spokesperson for the Atalanta anti-piracy effort based out of the Rota Naval Base, Spain, told CNBC via email that the coalition of maritime forces protecting against pirates around the Horn of Africa will be enhanced.
“In a week’s time, we will have additional ships and forces deployed to the area. We will do our utmost to continue fulfilling our missions, which include the fight against piracy and the protection of Word Food Programme vessels and all vulnerable vessels in our Area of Operations against these criminal networks,” the spokesperson wrote. “We will continue to work together with our international partners to maintain maritime security.”
Atalanta includes permanent flagship vessel ESPS VICTORIA and at certain periods of time, numerous other vessels to support the operation. EUNAVFOR currently has four more ships offering support: ITS Martinengo, FS Alsace, FS Languedoc, and ITS Duilio. The spokesperson said EU member state support allows the operation to increase the number of assets very quickly, if necessary.
In response to a question from CNBC about expanding Red Sea security coverage to the Somali Coast, a U.S. Navy spokesperson wrote,“To protect operational security and the safety of our service members, we do not discuss or forecast future operations or postures.”
“What we can tell you is that Operation Prosperity Guardian (OPG) is working with participating countries to utilize increased patrols in the Red Sea to offer reassurance to the shipping industry and protect maritime traffic,” the Navy spokesperson said.
In the Red Sea, the U.S. Navy is working with allies to increase efforts to prevent Houthi rebel attacks, which are continuing despite multiple U.S. airstrikes against Houthi targets. Much merchant vessel traffic is now taking the longer transit around the Cape of Good Hope instead of transiting the Red Sea. French ocean carrier CMA CGM is among firms to fully halt its Red Sea transits, according to a person familiar with the matter. It joins shipping giants MSC, Maersk, Hapag Lloyd and others who have earlier announced they were diverting away from the Red Sea. According to Kuehne + Nagel data, almost 100% of the former Red Sea traffic has been rerouted around the Cape of Good Hope.
The Houthis most recent attacks on commercial vessels in the Red Sea this week were against a commercial container vessel and a U.S.-owned bulker vessel carrying U.S. cargo. The Houthis have attacked commercial shipping a total of 39 times.
Iran on Sunday denounced U.S. and British air strikes on Yemen as “fueling chaos and disorder” and risking an escalation of the war in the Middle East.
Washington and London, with support from partner nations, on Saturday launched a fresh round of air and missile strikes on Iran-backed Houthis in Yemen in retaliation for the group’s continued attacks on international shipping. A day earlier, U.S. long-range aircraft bombarded Iranian military and proxy targets in Iraq and Syria.
Iran’s foreign ministry spokesperson, Nasser Kanani, claimed that the strikes contradict U.S. and U.K. policy of wanting to avoid an escalation in the conflict.
These attacks are “in clear contradiction with the repeated claims of Washington and London that they do not want the expansion of war and conflict in the region,” Kanani said, according to AFP. He added that further attacks on Houthi rebels in Yemen would constitute a “threat to international peace and security.”
“We have been saying this a long time,” he said on a visit to Brussels. “I have been here three times before and always we said if we didn’t do this … the Houthis will never stop. The Houthis have an ideology, have a project. Iran has a project in the region and unfortunately, the others do not respond.”
He expressed frustration that the EU and U.S. spent years pouring their diplomatic energies into wooing Tehran for a nuclear deal, rather than exerting more pressure on the Islamic Republic to stop supporting their Houthi allies, fellow Shi’ite Muslims who were seeking to impose what he labeled a “theocratic, totalitarian” police state.
The idea behind the nuclear talks was that Tehran should limit its nuclear ambitions in return for sanctions relief, but an accord proved out of reach.
No one paid attention
Bin Mubarak noted international momentum for action — which has included U.S. and British strikes on Houthi targets — did not finally come about “because of what [the Houthis] did to the Yemenis. They killed thousands of Yemenis. Not because of the atrocities they committed, raping women … jailing women … Just look at what Houthis did. No one is paying attention.”
He explained Western diplomacy toward Iran was supposed to have focused on three elements: the nuclear program, Tehran’s support for regional proxies, and its ballistic missile program. The fixation on the first, to the detriment of the other two, means the West is now facing an adversary in Yemen that has been very well armed by Iran, bin Mubarak complained.
“[Iran’s] Shahed drones, the first time we started hearing the European Union talking about it, they were being used in Ukraine. But before that, for years, we were saying Iran is supplying Houthis and drones are attacking Yemeni people. No one was believing [it],” he continued, adding that Houthi drone strikes stopped Yemeni oil exports in October 2022.
While the scale and target of Biden’s promised response is not yet clear, any unilateral move is likely to draw blowback from key allies in the Middle East who worry about sparking a regional war.
Turkey, a key NATO ally, has denounced Israel’s campaign in Gaza, while President Recep Tayyip Erdoğan has accused the U.K. and the U.S. of trying to turn the Red Sea into a “sea of blood.”
“Turkey does not want to be drawn into this conflict because it shares a border with Iran,” said Selin Nasi, a visiting fellow at the European Institute of the London School of Economics. “If the U.S. as its main ally in NATO gets involved in this military conflict directly then Turkey has to choose a side, and that will mean it’s harder to maintain a balanced approach — like it has done with the war in Ukraine.”
The challenge for Biden is how to retaliate without risking escalation by Iran and its partners in the region. Conversely, doing nothing — especially after having said he would avenge the deaths of the three U.S. soldiers — would leave him vulnerable to a charge of weakness from Trump.
“Iran’s leadership probably calculates that the United States will be reticent to fulsomely respond in any manner that would risk escalation of tensions in the Middle East and spark the region-wide [conflict] the Biden administration has admirably tried to prevent the past three months,” said Jonathan Panikoff, a former U.S. deputy national intelligence officer.
But the U.S. may have “to undertake a more fulsome response to restore deterrence,” he added.
Jamie Dettmer, Jeremy Van der Haegen and Laura Kayali contributed reporting.
Oil futures popped higher Sunday evening, after a drone attack that killed three U.S. service members in northern Jordan, blamed by the White House on Iran-backed militants, marked a major escalation of tensions in the Middle East.
West Texas Intermediate crude for March delivery CL00, +1.22%
CLH24, +1.22%
was up $1.09, or 1.4%, at $79.10 a barrel on the New York Mercantile Exchange. March Brent crude BRN00, +1.15%
BRNH24, +1.14%,
the global benchmark, gained $1.11, or 1.3%, to trade at $84.66 a barrel on ICE Futures Europe.
Much will ultimately depend on the U.S. response and whether Iran takes action aimed at shutting down the Strait of Hormuz, Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch on Sunday afternoon.
“We are on the cusp of this escalating, which could seriously impact the flow of crude oil,” he said.
Three U.S. service members were killed and more than two dozen injured in a drone strike on a U.S. base in northeast Jordan, according to U.S. Central Command. They were the first U.S. fatalities in months of attacks on U.S. bases by Iran-backed militias since the start of the Israel-Hamas war in October.
President Joe Biden attributed the Sunday attack to an Iran-backed militia group and said the U.S. “will hold all those responsible to account at a time and in a manner (of) our choosing.” News reports said U.S. officials were still working to conclusively identify the precise group responsible for the attack, but have assessed that one of several Iranian-backed groups is to blame.
Some congressional Republicans called for direct retaliation on Iran.
“We must respond to these repeated attacks by Iran & its proxies by striking directly against Iranian targets & its leadership. The Biden administration’s responses thus far have only invited more attacks. It is time to act swiftly and decisively for the whole world to see,” wrote Sen. Roger Wicker of Mississippi, the senior Republican on the Senate Armed Services Committee, in a post on X.
Oil futures rallied last week to their highest since November, but with gains attributed in part to production outages in the U.S. and more upbeat expectations around economic growth.
“Crude already has the wind to its back, so this will only offer further upside,” Chris Weston, head of research at Australian brokerage Pepperstone told MarketWatch in an email.
With the U.S. election later this year, “Biden needs to strike a balance between increasing aggression that potentially puts U.S. serviceman lives in danger and could potentially raise the cost of living…while also showing a defiant stance that shows his resolve against terror,” Weston said.
Oil prices have seen short-lived rallies around developments in the Middle East since the start of the Israel-Hamas war, but have failed to build in a lasting geopolitical risk premium. West Texas Intermediate crude CL00, +1.22%
CL.1, +1.22%,
the U.S. benchmark, remains around $15 below its 2023 peak in the mid-$90s set in late September. Brent crude BRN00, +1.15%,
the global benchmark, pushed back above $80 a barrel last week.
Attacks by Iran-backed Houthi militants on Red Sea shipping have forced a rerouting of tankers and cargo ships. For crude, that’s had implications for the physical market but hasn’t interrupted the flow of crude from the Middle East.
A move by Iran aimed at closing off the Strait of Hormuz, the world’s biggest oil-transportation chokepoint, remains a top worry.
The strait is a narrow waterway that links the Persian Gulf with the Gulf of Oman and the Arabian Sea. At its narrowest point, the waterway is only 21 miles wide, and the width of the shipping lane in either direction is just two miles, separated by a two-mile buffer zone.
Energy Information Administration
Around 21 million barrels a day of crude moved through the waterway in the first half of 2023, equivalent to around a fifth of daily global consumption, according to the U.S. Energy Information Administration.
The U.S. stock market has largely looked past Middle East tensions, with the S&P 500 SPX
returning to record territory this month, while the Dow Jones Industrial Average DJIA
has also set a series of records.
Dow futures YM00, -0.20%
were off 94 points, or 0.3% as Asian trading got under way, while S&P 500 futures ES00, -0.22%
fell 12 points, or 0.2%, and Nasdaq-100 futures NQ00, -0.24%
lost 0.3%.
Away from oil, there were no signs of a significant surge in demand for instruments that traditionally serve as havens during periods of increased geopolitical tension. Futures on U.S. Treasurys TY00, +0.21%
saw a modest rise of 0.2%, while the U.S. dollar DXY
was little changed versus major rivals and gold futures GC00, +0.41%
ticked up 0.4%.
Escalating Middle East tensions won’t go unnoticed by traders, but probably doesn’t warrant a “solid derisking,” Weston said, particularly with investors facing a barrage of major market events in the week ahead.
For U.S.-focused investors, the week ahead features a Federal Reserve policy meeting, earnings from tech industry heavyweights and a crucial December jobs report.
The Middle East situation “won’t take us too far off the rates, growth track, but we have an eye on whether this escalates,” Weston said.
Though unsuccessful, the attack marks an intensification in the battle between the Houthis, which control large parts of Yemen, and a U.S.-led naval operation aimed at protecting commercial shipping in one of the most important global trade routes.
In recent weeks, Western navies have repeatedly responded to Houthi attacks against cargo ships traveling along the coast of Yemen that began soon after the October 7 attack by the Hamas militant group against Israel.
The Yemen-based group said it was conducting its attacks in solidarity with the Palestinian group. In response, Western militaries are now increasingly targeting Houthi weapons sites in Yemen.
On Friday, the Houthi rebels also struck an oil tanker with a missile, according to the ship’s operator Trafigura. The company said on Saturday that it was assessing the security risks of further Red Sea voyages after firefighters put out a blaze on the tanker, the Marlin Luanda.
TOKYO (AP) — Asian shares slid Wednesday after a decline overnight on Wall Street and disappointing China growth data, while Tokyo’s main benchmark momentarily hit another 30-year high.
Japan’s benchmark Nikkei 225 NIY00, -0.95%
reached a session high of 36,239.22, but reverted lower, last down 0.3% to 35,477. The Nikkei has been hitting new 34-year highs, or the best since February 1990 during the so-called financial bubble. Buying focused on semiconductor-related shares, and a cheap yen helped boost exporter issues.
Hong Kong’s Hang Seng HK:HSCI
tumbled 4% to 15,220.72, with losses building after data showed China hitting its economic growth target of 5.2% for 2023, surpassing government expectations, but short of the 5.3% some analysts expected. The Shanghai Composite CN:SHCOMP
shed 2% to 2,833.62.
Australia’s S&P/ASX 200 AU:ASX10000
slipped 0.2% to 7,401.30. South Korea’s Kospi KR:180721
dropped 2.4% to 2,435.90.
Investors were keeping their eyes on upcoming earnings reports, as well as potential moves by the world’s central banks, to gauge their next moves. Wall Street slipped in a lackluster return to trading following a three-day holiday weekend.
The S&P 500 SPX
fell 17.85 points, or 0.4%, to 4,765.98. The Dow Jones Industrial Average DJIA
dropped 231.86, or 0.6%, to 37,361.12, and the Nasdaq COMP
sank 28.41, or 0.2%, to 14,944.35.
Spirit Airlines SAVE, -47.09%
lost 47.1% after a U.S. judge blocked its takeover by JetBlue Airways JBLU, +4.91%
on concerns it would mean higher airfares for flyers. JetBlue rose 4.9%.
Stocks of banks were mixed, meanwhile, as earnings reporting season ramps up for the final three months of 2023. Morgan Stanley MS, -4.16%
sank 4.2% after it said a legal matter and a special assessment knocked $535 million off its pretax earnings, while Goldman Sachs GS, +0.71%
edged 0.7% higher after reporting results that topped Wall Street’s forecasts.
Companies across the S&P 500 are likely to report meager growth in profits for the fourth quarter from a year earlier, if any, if Wall Street analysts’ forecasts are to be believed. Earnings have been under pressure for more than a year because of rising costs amid high inflation.
But optimism is higher for 2024, where analysts are forecasting a strong 11.8% growth in earnings per share for S&P 500 companies, according to FactSet. That, plus expectations for several cuts to interest rates by the Federal Reserve this year, have helped the S&P 500 rally to 10 winning weeks in the last 11. The index remains within 0.6% of its all-time high set two years ago.
Treasury yields BX:TMUBMUSD10Y
have already sunk on expectations for upcoming cuts to interest rates, which traders believe could begin as early as March. It’s a sharp turnaround from the past couple years, when the Federal Reserve was hiking rates drastically in hopes of getting high inflation under control.
Easier rates and yields relax the pressure on the economy and financial system, while also boosting prices for investments. And for the past six months, interest rates have been the main force moving the stock market, according to Michael Wilson, strategist at Morgan Stanley.
He sees that dynamic continuing in the near term, with the “bond market still in charge.”
For now, traders are penciling in many more cuts to rates through 2024 than the Fed itself has indicated. That raises the potential for big market swings around each speech by a Fed official or economic report.
On Wall Street, Boeing fell to one of the market’s sharper losses as worries continue about troubles for its 737 Max 9 aircraft following the recent in-flight blowout of an Alaska Air ALK, -2.13%
jet. Boeing BA, -7.89%
lost 7.9%.
In energy trading, benchmark U.S. crude CL00, -1.55%
lost 90 cents to $71.75 a barrel. Brent crude BRN00, -1.37%,
the international standard, fell 78 cents to $77.68 a barrel.
In currency trading, the U.S. dollar USDJPY, +0.44%
rose to 147.90 Japanese yen from 147.09 yen. The euro EURUSD, -0.10%
cost $1.0868, down from $1.0880.
Iran’s navy on Thursday boarded and seized a Greek-operated oil tanker, the St. Nikolas, off the coast of Oman.
The high seas seizure heightens tensions with the West, not far from where Iran-backed Houthi rebels have been attacking merchant ships and facing off with American and British naval vessels in the Red Sea.
The tanker was transiting through the Strait of Hormuz en route to Turkey when the U.K. Maritime Trade Operations (UKMTO) reported hearing “unknown voices” on board. Iranian news agency IRNA later confirmed its navy had seized the ship.
The St. Nikolas, operated by Greek shipping venture Empire Navigation, was previously known as the Suez Rajan. It was at the center of a dispute between Washington and Tehran in April last year after U.S. authorities seized the ship, loaded with 1 million barrels of Iranian crude oil.
The oil was ultimately ordered to be discharged in Houston by the U.S. Department of Justice. The Greek company pleaded guilty to smuggling sanctioned Iranian oil in September and paid a $2.4 million fine. The oil was sold at auction and profits were earmarked as compensation for American victims of terrorism.
Empire Navigation confirmed to AP that a crew of 18 Filipinos and the Greek captain are on board the vessel which is now in Iranian hands.
Speaking to POLITICO, Mark Wallace, former American ambassador to the U.N. and CEO of the United Against Nuclear Iran pressure group, said he was “extremely” concerned about the welfare of the crew and criticized the failure of Washington to respond to the seizure, despite the ship being under the protection of the U.S. Department of Justice.
Following the ship being boarded, he said, “we had about five hours until it got into Iranian territorial waters and the U.S. took no action … it looks like the U.S. and its allies have lost control of the Bab al-Mandab Strait and the Strait of Hormuz.”
Tehran’s move elevates the risk of wider conflict erupting in the region, where a U.S.-led coalition is currently patrolling the Red Sea to safeguard commercial ships from Houthi attacks.
On December 31, the U.S. navy engaged the Shia militant group and destroyed three boats that were harassing a Maersk ship. Just days later, Iran dispatched a warship to the Red Sea to back the Houthis.
On Tuesday, British and American navy forces thwarted the largest Houthi attack yet on vessels in the Red Sea. A total of 21 drones and various types of ballistic missiles were downed. No damage to ships was reported.
“Watch this space,” warned U.K. Defense Secretary Grant Shapps after the military action, vowing to step up retaliation against Houthi militants if they didn’t back down.
Western warplanes and guided missiles roared through the skies over Yemen in the early hours of Friday in a dramatic response to the worsening crisis engulfing the region, where the U.S. and its allies are facing a direct confrontation with Iranian-backed militants.
The strikes against Houthi fighters are a response to weeks of fighting in the Red Sea, where the group has attempted to attack or hijack dozens of civilian cargo ships and tankers in what it calls retribution for Israel’s military offensive in Gaza. Washington launched the massive aerial bombardment of the group’s military stores and drone launch sites in partnership with British forces, and with the support of a growing coalition that includes Germany, the Netherlands, Australia, Canada, South Korea and Bahrain.
Tensions between Tehran and the West have boiled over in the weeks since its ally, Hamas, launched its October 7 attack on Israel, while Hezbollah, the military group that controls much of southern Lebanon, has stepped up rocket launches across the border. Along with Hamas and Hezbollah, the Houthis form part of the Iranian-led ‘Axis of Resistance’ opposed to both the U.S. and Israel.
Now, the prospect of a full-blown conflict in one of the most politically fragile and strategically important parts of the world is spooking security analysts and energy markets alike.
Escalation fears
Houthi leaders responded to the strikes, which saw American and British forces hit more than 60 targets in 16 locations, with characteristic bravado. They warned the U.S. and U.K. will “have to prepare to pay a heavy price and bear all the dire consequences” for what they called a “blatant aggression.”
“We will confront America, kneel it down, and burn its battleships and all its bases and everyone who cooperates with it, no matter what the cost,” threatened Abdulsalam Jahaf, a member of the group’s security council.
However, following the overnight operation, Camille Lons, a visiting fellow at the European Council on Foreign Relations, said there may now be “a period of calm because it may take Iran some time to replenish the Houthis stocks” before they are able to resume high-intensity attacks on Red Sea shipping. But, she cautioned, their motivation to continue to target shipping will likely be unaltered.
The Western strikes are “unlikely to immediately halt Houthi aggression,” agreed Jonathan Panikoff, a former U.S. national intelligence officer for the Near East. “That will almost certainly mean having to continue to respond to Houthi strikes, and potentially with increasing aggression.”
“The Houthis view themselves as having little to lose, emboldened militarily by Iranian provisions of support and confident the U.S. will not entertain a ground war,” he said.
Iran also upped the ante earlier this week by boarding and commandeering a Greek-operated oil tanker that was loaded with Iraqi crude destined for Turkey, intercepting it as it transited the Strait of Hormuz. The vessel, the St. Nikolas, was previously apprehended for violating sanctions on Iranian oil and its cargo was confiscated and sold off by the U.S. Treasury Department. Its Greek captain and crew of 18 Filipino nationals are now in Iranian custody, with the incident marking a sharp escalation in the threats facing maritime traffic.
Israeli connection
Washington and London are striving to distinguish their bid to deter the Houthis in the Red Sea from the war in Gaza, fearful that merging the two will hand Tehran a propaganda advantage in the Middle East. The Houthis and Iran are keen to accomplish the reverse.
The Houthi leadership claims its attacks on maritime traffic are aimed at pressuring Israel to halt its bombing of the Gaza Strip and it insists it is only targeting commercial vessels linked to Israel or destined to dock at the Israeli port of Eilat, a point contested by Western powers.
“The Houthis claim that their attacks on military and civilian vessels are somehow tied to the ongoing conflict in Gaza — that is completely baseless and illegitimate. The Houthis also claim to be targeting specifically Israeli-owned ships or ships bound for Israel. That is simply not true, they are firing indiscriminately on vessels with global ties,” a senior U.S. official briefing reporters in Washington said Friday.
Wider Near East crisis
The Red Sea isn’t the only hotspot where American and European forces and their allies are facing off against Iran and its partners.
In November, U.S. F-15 fighter jets hit a weapons storage facility in eastern Syria that the Pentagon says was used by the Iranian Islamic Revolutionary Guard Corps and the Shia militants it supports in the war-torn country. The response came after dozens of American troops were reportedly injured in attacks in Iraq and Syria linked back to Tehran.
Israel’s war with Hamas has also risked spreading, after a blast killed one of the militant group’s commanders in the Lebanese capital, Beirut, earlier in January. Hezbollah vowed a swift response and tensions have soared along the border between the two countries, with Israeli civilians evacuated from their homes in towns and villages close to the frontier.
All of that contributes to an increasingly volatile environment that has neighboring countries worried, said Christian Koch, director at the Saudi Arabia-based Gulf Research Center.
“There’s a lot at stake at the moment and the Kingdom of Saudi Arabia and others are extremely worried about further escalation and then being subject to retaliation,” he said. “Now, the danger of regional escalation has been heightened further, which could mean that Iran will get further involved in the conflict, and this is a dangerous spiral downwards.”
While long-planned efforts to normalize ties between the Saudis and Israel collapsed in the wake of the October 7 attack and the subsequent military response, Riyadh has pushed forward with a policy of de-escalation with the Houthis after a decade of violent conflict, and sought an almost unprecedented rapprochement with Iran.
“Saudi Arabia has had one objective, which is to prevent this from escalating into a wider regional war,” said Tobias Borck, an expert on Middle East security at the Royal United Services Institute. “It has attempted over the last few years to bring its intervention in the war in Yemen to a close, including through negotiations with the Houthis and actually from all we know from the outside, [they] are reasonably close to an agreement.”
The Western coalition is therefore a source of anxiety, rather than relief, for Gulf States.
“Saudi Arabia and UAE are staying out of this coalition because mainly they don’t want to have the Houthis attack them as they had been for years and years with cruise missiles,” said retired U.S. General Mark Kimmitt, a former U.S. assistant secretary of state for political-military affairs. However, American or European boots on the ground are unlikely to be necessary, he added, because “our capabilities these days to find, fix and attack even mobile missile launchers is pretty well refined.”
Far-reaching consequences
At the intersection of Europe and Asia, the Red Sea is a vital thoroughfare for energy and international trade. Maritime traffic through the region has already dropped by 20 percent, Rear Admiral Emmanuel Slaars, the joint commander of French forces in the region, told reporters on Thursday.
According to data published this week by the German IfW Kiel institute, global trade fell by 1.3 percent from November to December, with the Houthi attacks likely to have been a contributing factor.
The volume of containers in the Red Sea also plummeted and is currently almost 70 percent below usual, the institute said. In December, that caused freight costs and transportation time to rise and imports and exports from the EU to be “significantly lower” than in November.
In one indication of the impact on industrial supply chains, U.S. electric vehicle maker Tesla said Friday it would shut its factory in Germany for two weeks.
Around 12 percent of the world’s oil and 8 percent of its gas normally flow through the waterway, as well as hundreds of cargo ships. Oil prices climbed more than 2.5 percent following the strikes, fueling market concerns of the impact a wider conflict could have on oil supplies from the region, especially those being shipped through the Strait of Hormuz, linking the Persian Gulf with the Indian Ocean and the world’s most important oil chokepoint.
The Houthi attacks on the Red Sea, one of the world’s busiest waterways, have already caused major shipping companies, including oil giant BP, to halt shipments through the Red Sea, opting for a lengthy detour around the Cape of Good Hope instead.
According to Borck, the impact on energy prices has been limited so far but will depend on what happens next.
“We need to look for two actors’ actions here. One is the Houthis, how they respond, and the other one is, of course, looking at how Iran responds,” he said. While Tehran has the “nuclear option” of closing the Strait of Hormuz altogether, it’s unlikely to do so at this stage.
“I don’t think the Strait of Hormuz is next. I think there would be quite a few steps on the escalation ladder first,” he added.
But Simone Tagliapietra, an energy expert at Brussels’ Bruegel think tank, warned that a growing confrontation with Iran could lead to tougher enforcement of sanctions on its oil exports. The West has turned a blind eye to Tehran’s increasing sales to China in the wake of the war in Ukraine, which has relieved some pressure on global energy markets.
A crackdown, he believes, “could see global oil prices rising substantially, pushing inflation higher and further complicating the efforts of central banks to bring it under control.”
However, Saudi Arabia and the UAE could help compensate for such a move by ramping up their own production — provided they’re willing to risk the ire of Iran.
Gabriel Gavin reported from Yerevan, Armenia. Antonia Zimmermann from Brussels and Jamie Dettmer from Tel-Aviv.
Laura Kayali contributed reporting from Paris.
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Gabriel Gavin, Antonia Zimmermann and Jamie Dettmer
On October 7, Hamas fighters launched a bloody attack against Israel, using paragliders, speedboats and underground tunnels to carry out an offensive that killed almost 1,200 people and saw hundreds more taken back to the Gaza Strip as prisoners.
Almost three months on, Israel’s massive military retaliation is reverberating around the region, with explosions in Lebanon and rebels from Yemen attacking shipping in the Red Sea. Meanwhile, Western countries are pumping military aid into Israel while deploying fleets to protect commercial shipping — risking confrontation with the Iranian navy.
That’s in line with a grim prediction made last year by Iranian Foreign Minister Hossein Amirabdollahian, who said that Israel’s counteroffensive in Gaza meant an “expansion of the scope of the war has become inevitable,” and that further escalation across the Middle East should be expected.
What’s happening?
The Israel Defense Forces are still fighting fierce battles for control of the Gaza Strip in what officials say is a mission to destroy Hamas. Troops have already occupied much of the north of the 365-square-kilometer territory, home to around 2.3 million Palestinians, and are now stepping up their assault in the south.
Entire neighborhoods of densely-populated Gaza City have been levelled by intense Israeli shelling, rocket attacks and air strikes, rendering them uninhabitable. Although independent observers have been largely shut out, the Hamas-controlled Health Ministry claims more than 22,300 people have been killed, while the U.N. says 1.9 million people have been displaced.
On a visit to the front lines, Israeli Defense Minister Yoav Gallant warned that his country is in the fight for the long haul. “The feeling that we will stop soon is incorrect. Without a clear victory, we will not be able to live in the Middle East,” he said.
As the Gaza ground war intensifies, Hamas and its allies are increasingly looking to take the conflict to a far broader arena in order to put pressure on Israel.
According to Seth Frantzman, a regional analyst with the Jerusalem Post and adjunct fellow at the Foundation for Defense of Democracies, “Iran is certainly making a play here in terms of trying to isolate Israel [and] the U.S. and weaken U.S. influence, also showing that Israel doesn’t have the deterrence capabilities that it may have had in the past or at least thought it had.”
Northern front
On Tuesday a blast ripped through an office in Dahieh, a southern suburb of the Lebanese capital, Beirut — 130 kilometers from the border with Israel. Hamas confirmed that one of its most senior leaders, Saleh al-Arouri, was killed in the strike.
Government officials in Jerusalem have refused to confirm Israeli forces were behind the killing, while simultaneously presenting it as a “surgical strike against the Hamas leadership” and insisting it was not an attack against Lebanon itself, despite a warning from Lebanese caretaker Prime Minister Najib Mikati that the incident risked dragging his country into a wider regional war.
Tensions between Israel and Lebanon have spiked in recent weeks, with fighters loyal to Hezbollah, the Shia Islamist militant group that controls the south of the country, firing hundreds of rockets across the frontier. Along with Hamas, Hezbollah is part of the Iranian-led “Axis of Resistance” that aims to destroy the state of Israel.
In a statement released on Tuesday, Iran’s foreign ministry said the death of al-Arouri, the most senior Hamas official confirmed to have died since October 7, will only embolden resistance against Israel, not only in the Palestinian territories but also in the wider Middle East.
The Israel Defense Forces are still fighting fierce battles for control of the Gaza Strip in what officials say is a mission to destroy Hamas | Jack Guez/AFP via Getty Images
“We’re talking about the death of a senior Hamas leader, not from Hezbollah or the [Iranian] Revolutionary Guards. Is it Iran who’s going to respond? Hezbollah? Hamas with rockets? Or will there be no response, with the various players waiting for the next assassination?” asked Héloïse Fayet, a researcher at the French Institute for International Relations.
In a much-anticipated speech on Wednesday evening, Hezbollah leader Hassan Nasrallah condemned the killing but did not announce a military response.
Red Sea boils over
For months now, sailors navigating the narrow Bab-el-Mandeb Strait that links Europe to Asia have faced a growing threat of drone strikes, missile attacks and even hijackings by Iran-backed Houthi militants operating off the coast of Yemen.
The Houthi movement, a Shia militant group supported by Iran in the Yemeni civil war against Saudi Arabia and its local allies, insists it is only targeting shipping with links to Israel in a bid to pressure it to end the war in Gaza. However, the busy trade route from the Suez Canal through the Red Sea has seen dozens of commercial vessels targeted or delayed, forcing Western nations to intervene.
Over the weekend, the U.S. Navy said it had intercepted two anti-ship missiles and sunk three boats carrying Houthi fighters in what it said was a hijacking attempt against the Maersk Hangzhou, a container ship. Danish shipping giant Maersk said Tuesday that it would “pause all transits through the Red Sea until further notice,” following a number of other cargo liners; energy giant BP is also suspending travel through the region.
On Wednesday the Houthis targeted a CMA CGM Tage container ship bound for Israel, according to the group’s military spokesperson Yahya Sarea. “Any U.S. attack will not pass without a response or punishment,” he added.
“The sensible decision is one that the vast majority of shippers I think are now coming to, [which] is to transit through round the Cape of Good Hope,” said Marco Forgione, director general at the Institute of Export & International Trade. “But that in itself is not without heavy impact, it’s up to two weeks additional sailing time, adds over £1 million to the journey, and there are risks, particularly in West Africa, of piracy as well.”
However, John Stawpert, a senior manager at the International Chamber of Shipping, noted that while “there has been disruption” and an “understandable nervousness about transiting these routes … trade is continuing to flow.”
“A major contributory factor to that has been the presence of military assets committed to defending shipping from these attacks,” he said.
The impacts of the disruption, especially price hikes hitting consumers, will be seen “in the next couple of weeks,” according to Forgione. Oil and gas markets also risk taking a hit — the price of benchmark Brent crude rose by 3 percent to $78.22 a barrel on Wednesday. Almost 10 percent of the world’s oil and 7 percent of its gas flows through the Red Sea.
Western response
On Wednesday evening, the U.S., Australia, Bahrain, Belgium, Canada, Denmark, Germany, Italy, Japan, the Netherlands, New Zealand, and the United Kingdom issued an ultimatum calling the Houthi attacks “illegal, unacceptable, and profoundly destabilizing,” but with only vague threats of action.
“We call for the immediate end of these illegal attacks and release of unlawfully detained vessels and crews. The Houthis will bear the responsibility of the consequences should they continue to threaten lives, the global economy, and free flow of commerce in the region’s critical waterways,” the statement said.
The Houthi movement insists it is only targeting shipping with links to Israel in a bid to pressure it to end the war in Gaza | Houthi Movement via Getty Images
Despite the tepid language, the U.S. has already struck back at militants from Iranian-backed groups such as Kataeb Hezbollah in Iraq and Syria after they carried out drone attacks that injured U.S. personnel.
The assumption in London is that airstrikes against the Houthis — if it came to that — would be U.S.-led with the U.K. as a partner. Other nations might also chip in.
Two French officials said Paris is not considering air strikes. The country’s position is to stick to self-defense, and that hasn’t changed, one of them said. French Armed Forces Minister Sébastien Lecornu confirmed that assessment, saying on Tuesday that “we’re continuing to act in self-defense.”
“Would France, which is so proud of its third way and its position as a balancing power, be prepared to join an American-British coalition?” asked Fayet, the think tank researcher.
Iran looms large
Iran’s efforts to leverage its proxies in a below-the-radar battle against both Israel and the West appear to be well underway, and the conflict has already scuppered a long-awaited security deal between Israel and Saudi Arabia.
“Since 1979, Iran has been conducting asymmetrical proxy terrorism where they try to advance their foreign policy objectives while displacing the consequences, the counterpunches, onto someone else — usually Arabs,” said Bradley Bowman, senior director of Washington’s Center on Military and Political Power. “An increasingly effective regional security architecture, of the kind the U.S. and Saudi Arabia are trying to build, is a nightmare for Iran which, like a bully on the playground, wants to keep all the other kids divided and distracted.”
Despite Iran’s fiery rhetoric, it has stopped short of declaring all-out war on its enemies or inflicting massive casualties on Western forces in the region — which experts say reflects the fact it would be outgunned in a conventional conflict.
“Neither Iran nor the U.S. nor Israel is ready for that big war,” said Alex Vatanka, director of the Middle East Institute’s Iran program. “Israel is a nuclear state, Iran is a nuclear threshold state — and the U.S. speaks for itself on this front.”
Israel might be betting on a long fight in Gaza, but Iran is trying to make the conflict a global one, he added. “Nobody wants a war, so both sides have been gambling on the long term, hoping to kill the other guy through a thousand cuts.”
Emilio Casalicchio contributed reporting.
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Gabriel Gavin, Antonia Zimmermann and Laura Kayali
Since Operation Prosperity Guardian was announced just over 10 days ago, 1,200 merchant ships have traveled through the Red Sea region, and none had been hit by drone or missile strikes, Vice Adm. Brad Cooper said in an Associated Press interview, although the U.S. military said that one ship reported being struck by a missile late Saturday.
Cooper said earlier that day that additional countries are expected to sign on to the mission. Denmark was the latest, announcing Friday it plans to send a frigate to the mission that Defense Secretary Lloyd Austin announced during a visit to Bahrain, where the Navy’s 5th Fleet is based, saying that “this is an international challenge that demands collective action.”
The narrow Bab el-Mandeb Strait connects the Gulf of Aden to the Red Sea and then the Suez Canal. The crucial trade route links markets in Asia and Europe. The seriousness of the attacks, several of which have damaged vessels, led multiple shipping companies to order their vessels to hold in place and not enter the strait until the security situation improved. Some major shippers were sending their ships around Africa and the Cape of Good Hope, adding time and costs to the journeys.
Currently there are five warships from the United States, France, and the United Kingdom patrolling the waters of the southern Red Sea and the western Gulf of Aden, said Cooper, who heads the 5th Fleet. Since the operation started, the ships have shot down a total of 17 drones and four anti-ship ballistic missiles, he said.
The U.S. military said Saturday it shot down two anti-ship ballistic missiles fired toward a Maersk container ship in the Red Sea after the ship reported it had been hit by a missile. Two Navy destroyers responded to the call for help, and the Denmark-owned vessel was reportedly seaworthy and no injuries were noted, according to a statement from U.S. Central Command. Hours later, four Houthi boats fired at the same ship and tried to board, Central Command said. U.S. forces on two helicopters responded to the distress call and were also fired upon before they sank three of the Houthi vessels and killed the crews, Central Command said. The fourth boat fled the area. No damage to U.S. personnel or equipment was reported.
There have been about two dozen attacks on international shipping by the Houthis since Oct. 19.
Austin discussed the situation with the Dutch defense minister, Kajsa Ollongren, and they condemned the attacks as unacceptable and “profoundly destabilizing” to international order and global commerce, the Pentagon said Saturday.
The U.S. has said that more than 20 nations are participating in the security mission, but a number of those nations have not acknowledged it publicly.
“I expect in the coming weeks we’re going to get additional countries,” Cooper said, noting Denmark’s recent announcement.
Cooper said the coalition is in direct communication with commercial ships to provide guidance on “maneuvering and the best practices to avoid being attacked,” and working closely with the shipping industry to coordinate security.
An international task force had been set up in April 2022 to improve maritime security in the region. But Cooper said Operation Prosperity Guardian has more ships and a persistent presence to assist vessels.
Since the operation started, the Houthis have stepped up their use of anti-ship ballistic missiles, Cooper said. “We are cleareyed that the Houthi reckless attacks will likely continue,” he said.
The Houthis seized Yemen’s capital, Sanaa, in 2014, launching a grinding war against a Saudi-led coalition that sought to restore the government. The militants have sporadically targeted ships in the region, but the attacks increased since the start of the Israel-Hamas war.
The Houthi threatened to attack any vessel they believe is either going to or coming from Israel. That has escalated to apparently any vessel, with container ships and oil tankers flagged to countries such as Norway and Liberia being attacked or drawing missile fire.
The shipping company Maersk had announced earlier that it had decided to re-route its ships that have been paused for days outside the strait and Red Sea, and send them around Africa instead. Maersk announced Dec. 25 that it was going to resume sending ships through the strait, citing the operation. Cooper said another shipping company had also resumed using the route.
“Commerce is definitely flowing,” Cooper said.
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A large cargo ship with a fire in its hold is being kept 2 miles (3.22 kilometers) offshore of an Alaska port as a precaution while efforts are undertaken to extinguish the flames, the U.S. Coast Guard said Saturday.
There were no injuries to the 19 crew members aboard the Genius Star XI, which was carrying a load of lithium-ion batteries across the Pacific Ocean, from Vietnam to San Diego, the guard’s Alaska district said in a release.
The fire started on Christmas Day in cargo hold No. 1, a spokesperson for ship owner Wisdom Marine Group said in a statement. The crew released carbon dioxide into the hold and sealed it over concerns of an explosion.
Ship’s personnel alerted the Coast Guard early Thursday morning about the fire. The Coast Guard said it diverted the 410-foot (125-meter) cargo ship to Dutch Harbor, one of the nation’s busiest fishing ports located in Unalaska, an Aleutian Islands community about 800 miles (1,287 kilometers) southwest of Anchorage.
The ship arrived Friday, but an order preventing the Genius Star XI from going close to shore was issued to “mitigate risks associated with burning lithium-ion batteries or toxic gasses produced by the fire,” Coast Guard Lt. Cmdr. Mike Salerno said in an email to The Associated Press.
“The city’s primary concern is protecting the health and safety of our community members, the environment, fisheries and commerce,” Unalaska acting city manager Marjie Veeder said in a statement.
Veeder said the city’s emergency operations center “is acting on behalf of the community and advocating our position to protect our community. We are actively monitoring the situation.”
There is danger associated with any vessel fire, prompting the Coast Guard to issue another safety measure besides preventing the ship from getting closer than 2 miles (3.22 kilometers) to shore.
”The safety of Unalaska residents and the surrounding communities is a top priority for us, so as a precaution we are keeping a one-mile (1.61-kilometer) safety zone around the vessel,” Salerno said.
The owners said there has been no oil leaks associated with the incident.
A team of marine firefighting experts late Friday conducted an assessment of the ship and found no signs of structural deformation or blistering outside of the cargo hold, the Coast Guard said.
That team remains on board the ship to evaluate the situation, Salerno said.
An expert hired by the Taipei, Taiwan-based Wisdom Marine Group “is working diligently to create contingency plans, arrange for a firefighting team, and ensure the necessary equipment is in place,’ the group said in a statement.
The Coast Guard will investigate the cause of the fire.
The Genius Star XI left Vietnam on Dec. 10 en route to Dutch Harbor, according to the Marine Traffic website. The ship with a carrying capacity of more than 13,000 tons (11,793 metric tonnes) sails under the flag of Panama.
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The 2023 rally for stocks in the U.S. accelerated as more investors bought the idea that the Federal Reserve succeeded in its effort to bring inflation to heel.
The S&P 500 SPX
ended Friday with a 24.2% gain for 2023, following a 19.4% decline in 2022. (All price changes in this article exclude dividends). Among the 500 stocks, 65% were up for 2023. Below is a list of the year’s 20 best performers in the benchmark index.
This article focuses on large-cap stocks. MarketWatch Editor in Chief Mark DeCambre took a broader look at all U.S. stocks of companies with market capitalizations of at least $1 billion, to list 10 with gains ranging from 412% to 1,924%.
The Fed began raising short-term interest rates and pushing long-term rates higher in March 2022 by allowing its bond portfolio to run off. That explains the poor performance for stocks in 2022, as bonds and even bank accounts because more attractive to investors.
Investors are anticipating the return to a low-rate environment by scooping up 10-year U.S. Treasury notes BX:TMUBMUSD10Y,
whose yield ended the year at 3.88%, down from 4.84% on Oct. 27 — the day of the S&P 500’s low for the second half of 2023.
Before looking at the list of best-performing stocks of 2023, here’s a summary of how the 11 sectors of the S&P 500 performed, with the full index and three more broad indexes at the bottom:
A look at 2023 price action really needs to encompass what took place in 2022 for context. The broad indexes haven’t moved much from their levels at the end of 2022 (again, excluding dividends). We have included current forward price-to-earnings ratios along with those at the end of 2021 and 2022. These valuations have declined a bit, which may provide some comfort for investors wondering how likely it is for stocks to continue to rally in 2024.
Biggest price increases among the S&P 500
Here are the 20 stocks in the S&P 500 whose prices rose the most in 2023:
Shares of Uber Technologies Inc. and the ride-hailing giant’s smaller rival, Lyft Inc., have sprinted higher this year. But analysts on Friday suggested there might not be much left in the tank for either stock heading into 2024.
Nomura analysts Anindya Das and Masataka Kunugimoto on Friday downgraded Uber UBER, -2.49%
to a neutral rating from buy, arguing that most of the things that could drive the stock higher are already baked into the price. They also downgraded Lyft LYFT, -3.54%
to their equivalent of a sell rating from buy, saying the company failed to fully capitalize on the travel industry’s post-pandemic recovery.
Shares of Uber, which closed out the year up 142%, were down 2.5% on Friday. Lyft’s stock gave up 3.4% and finished 2023 up 34.8%.
Uber, the analysts said, had managed to grow this year while occasionally turning a profit, and consolidated its grip on the ride-sharing markets in the U.S. and Canada. Meanwhile, Lyft, they said, had stumbled in its efforts to take advantage of the travel rebound after pandemic restrictions eased, cutting more staff this year after doing the same in 2022.
After years of losing money, they said Uber’s stronger financials this year allowed it to refinance its debt at a lower interest rate and extend the terms of that debt. They noted the company recently joined the S&P 500 Index SPX
and that the market is expecting more stock buybacks from the company, as well as interest-rate cuts by the Federal Reserve next year.
“Thus, most of the milestones and catalysts that we were anticipating to boost Uber’s stock value have been largely met,” they said.
They added: “At this time, we think most of the catalysts for the stock are already priced in, and Uber is fairly valued at the current price. We therefore downgrade it to Neutral from Buy.”
Lyft has tried to cut its prices to compete with Uber, and has held off on expanding into areas like food delivery. But as travel demand settles, the analysts suggested, the advantages would still flow to its archrival.
“We expect 2024 to be more of a ‘normal’ year, in terms of people’s propensity to travel,” the analysts said. “Once the current rebound in travel subsides, we think Lyft’s subscale market positioning, and lack of cross-selling opportunities (unlike Uber), could constrain topline growth for the company.”
“Offsetting a more moderate pace of ridership growth by raising prices would be challenging for Lyft,” they said, “as we think it would be bound by the actions of its larger and more profitable peer, Uber.”
Opinions expressed by Entrepreneur contributors are their own.
Retailers and distribution-oriented businesses are feeling the squeeze on their bottom line.
Profit margins are under siege by escalating operational costs, due in part to the volatile price of energy and commodities and the ongoing labor shortage. With the Fed raising interest rates 11 times since March 2022 and inflation still out of range of the government’s 2% target, many ecommerce merchants are facing business challenges. Notably, the majority (52%) of small business owners rank inflation costs as their biggest challenge, causing balance sheet headaches and driving businesses to seek out innovative ways to protect profits.
Spooked by stubbornly high inflation, price-sensitive consumers are taking pause, causing ecommerce growth to slow and business owners to take a hard look at their bottom line. Indeed, when compared to the consistent double-digit growth for 46 consecutive quarters (except Q1 2019) from Q4 2009 to Q2 2021, the tepid single-digit ecommerce sales growth for six of the past eight quarters (including the last three) is a cause for concern for retailers.
While ecommerce growth has slowed, however, 2023 holiday sales projections look healthy and U.S. imports of containerized goods in October are at their highest levels since the pandemic boom. Deloitte forecasts U.S. ecommerce sales will grow 10.3% to 12.8%, year-over-year, during the 2023-2024 holiday season, driving potential sales of $278B to $284B this season. This is good news, right?
Shipping costs draining profits
While news of an influx of orders is music to retailers’ ears, holiday shoppers will expect fast delivery of purchases. Unfortunately, most won’t want to pay for this service. To satisfy customer expectations, the majority (72.2%) of retailers now offer free shipping in some capacity — a costly burden that takes a big bite out of profits.
And for ecommerce vendors who’ve expanded to selling via multiple channels (e.g. Amazon, Walmart, eBay), margins are being squeezed even tighter. Consider an ecommerce vendor that previously earned $10 on an order, for example. With the channels taking $2 and free shipping gobbling up $4, finding a way to recover some of that margin becomes top priority.
While retailers are painfully aware of the high costs of shipping, logistically and from a bottom-line perspective (and 2024’s general rate increases are expected to be 5.9% on average), most are unaware of the risks and hidden costs of relying on a single carrier to get the job done. Earlier this year, the threat of strike action by UPS cast unpredictability in the industry and exposed the risk that a single-carrier shipping model poses for delivery reliability and affordability.
Yet few ecommerce retailers use a multi-carrier shipping strategy, combined with technology-enabled rate shopping, to help curb costs while ensuring consistent delivery performance. A studyof September 2023 shipping volumes for 1,600 merchants showed that, on average, those who used rate shopping saved $4.39/shipment. This translates into average potential shipping savings of ~34%. Another compelling finding was that ~45% of merchants studied were candidates to save shipping costs by adding another carrier to their mix.
The decision to not adopt rate shopping — the ability to automatically compare and select the best shipping rates available in real-time — is largely due to the perception that rating structures are complicated and comparing carrier services is a tedious and labor-intensive task. With 100 orders to get out the door by end of day, no shipper has the time to manually check prices in each carrier’s system to find the cheapest rate.
Plus, many retailers feel satisfied that they’re getting “volume discounts” by giving all, or the large majority, of their shipping volume to one carrier, unaware that rate shopping could trim up to 30% off their shipping costs — savings well beyond any discounted rates a single carrier could offer.
So how do you simplify and accelerate rate shopping, reduce your shipping spend and start building back margins for your ecommerce business?
Shoring up margins with automated rate shopping
In today’s consumer-driven world, the need to compete with lightning-fast delivery and free shipping is real.
By implementing shipping software with automated rate shopping capabilities, you can instantly compare rates and services of multiple carriers — between two to five carriers is generally the sweet spot — to select the best carrier for the job and keep your shipping costs under control.
For each transaction, the software communicates with a carrier API to obtain the rate, compares shipping costs and transit times for multiple carriers and selects the least expensive or most expedited (or whatever criteria you’ve set) option — all in an instant, without any heavy lifting on your part.
The cheapest price is not always the goal. With automated rate shopping, you can build business rules for both performance and cost, handling exceptions based on your business’s unique parameters. For instance, the technology can help you capitalize on regional and local infrastructure to optimize deliveries, enabling you to apply business rules to leverage carriers’ strengths and weaknesses in their networks.
Imagine you’re shipping a parcel from Charlotte, NC to San Francisco, CA. Carrier X may cost $0.20 more but if its performance shipping to Northern California is consistently better than competitors, reliably getting parcels to your customers a day faster, it might be worth the small rate increase. And the beauty of automated rate shopping is that you can set a business rule to automatically recognize and act on this exception to improve the customer experience.
Alternatively, there may be a smaller carrier that specializes in West Coast shipments that would typically be overlooked by shippers relying on a single carrier. With automated rate shopping, you can build business rules to take advantage of the regional carrier’s cost competitiveness and shipping proficiency in a specific geographical area.
Final thoughts
The pressure to balance customer expectations with profitability is intense. Ecommerce businesses that spend more money than they need to on shipping or waste time manually searching for the cheapest shipping option are setting themselves up for failure.
By leveraging automated rate shopping and business rules, you’re able to build competition into the shipping process, diversifying and augmenting carrier networks to strengthen your operations. The multicarrier approach not only protects your business from crises like carrier strikes but it reduces shipping costs to protect margins, while enhancing the customer experience on a day-to-day basis.
DENVER (AP) — First, Colorado’s Supreme Court ruled that former President Donald Trump wasn’t eligible to run for his old job in that state. Then, Maine’s secretary of state ruled the same for her state.
Both decisions are historic. The Colorado court was the first court to apply to a presidential candidate a rarely used constitutional ban against those who “engaged in insurrection.” Maine’s secretary of state was the first top election official to unilaterally strike a presidential candidate from the ballot under that provision.
What’s next? Can Trump be put back on the ballot?
Both decisions are on hold while the legal process plays out. That means that Trump remains on the ballot in Colorado and Maine and that his political fate is now in the hands of the U.S. Supreme Court.
The Maine ruling will likely never take effect on its own. Its central impact is increasing pressure on the nation’s highest court to state clearly whether Trump remains eligible to run for president after the Jan. 6, 2021, attack on the U.S. Capitol.
What’s the legal issue that could keep Trump off the ballot?
After the Civil War, the U.S. ratified the 14th Amendment to guarantee rights to former slaves and more. It also included a two-sentence clause called Section 3, designed to keep former Confederates from regaining government power after the war.
“Section 3 of the 14th Amendment to the U.S. Constitution doesn’t require a criminal conviction to take effect.”
The measure reads: “No person shall be a Senator or Representative in Congress, or elector of President and Vice-President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.”
Congress did remove that disability from most Confederates in 1872, and the provision fell into disuse. But it was rediscovered after Jan. 6.
All the suits failed until the Colorado ruling. And dozens of secretaries of state have been asked to remove him from the ballot. All said they didn’t have the authority to do so without a court order — until Maine Secretary of State Shenna Bellows’s decision.
The Supreme Court has never ruled on Section 3. It’s likely to do so in considering appeals of the Colorado decision — the state Republican Party has already appealed, and Trump is expected to file his own shortly.
Bellows’s ruling cannot be appealed straight to the U.S. Supreme Court — it has to be appealed up the judicial chain first, starting with a trial court in Maine.
The Maine decision does force the high court’s hand, though. It was already highly likely the justices would hear the Colorado case, but Maine removes any doubt.
Trump lost Colorado in 2020, and he doesn’t need to win it again to garner an Electoral College majority next year. But he won one of Maine’s four Electoral College votes in 2020 by winning the state’s 2nd Congressional District, so Bellows’s decision would have a direct impact on his odds next November.
Until the high court rules, any state could adopt its own standard on whether Trump, or anyone else, can be on the ballot. That’s the sort of legal chaos the court is supposed to prevent.
What is Trump’s argument?
Trump’s lawyers have several arguments against the push to disqualify him. First, it’s not clear Section 3 applies to the president — an early draft mentioned the office, but it was taken out, and the language “an officer of the United States” elsewhere in the Constitution doesn’t mean the president, they contend.
Second, even if it does apply to the presidency, they say, this is a “political” question best decided by voters, not unelected judges. Third, if judges do want to get involved, the lawyers assert, they’re violating Trump’s rights to a fair legal procedure by flatly ruling he’s ineligible without some sort of fact-finding process like a lengthy criminal trial. Fourth, they argue, Jan. 6 wasn’t an insurrection under the meaning of Section 3 — it was more like a riot. Finally, even if it was an insurrection, they say, Trump wasn’t involved in it — he was merely using his free speech rights.
Of course, the lawyers who want to disqualify Trump have arguments, too.
The main one is that the case is actually very simple: Jan. 6 was an insurrection, Trump incited it, and he’s disqualified.
Why has this process taken so long?
The attack of Jan. 6, 2021, occurred nearly three years ago, but the challenges weren’t “ripe,” to use the legal term, until Trump petitioned to get onto state ballots this fall.
But the length of time also gets at another issue — no one has really wanted to rule on the merits of the case. Most judges have dismissed the lawsuits because of technical issues, including that courts don’t have the authority to tell parties whom to put on their primary ballots. Secretaries of state have dodged, too, usually telling those who ask them to ban Trump that they don’t have the authority to do so unless ordered by a court.
No one can dodge anymore. Legal experts have cautioned that, if the Supreme Court doesn’t clearly resolve the issue, it could lead to chaos in November — or in January 2025, if Trump wins the election. Imagine, they say, if the high court ducks the issue or says it’s not a decision for the courts to make, and Democrats win a narrow majority in Congress. Would they seat Trump or declare he’s ineligible under Section 3?
Why was this action taken in Maine?
Maine has an unusual process in which a secretary of state is required to hold a public hearing on challenges to politicians’ spots on the ballot and then issue a ruling. Multiple groups of Maine voters, including a bipartisan clutch of former state lawmakers, filed such a challenge, triggering Bellows’s decision.
Bellows is a Democrat and the former head of the Maine chapter of the American Civil Liberties Union. Trump’s attorneys asked her to recuse herself from the case, citing social-media posts calling Jan. 6 an “insurrection” and bemoaning Trump’s acquittal in his impeachment trial over the attack.
She refused, saying she wasn’t ruling based on personal opinions. But the precedent she sets is notable, critics say. In theory, election officials in every state could decide a candidate is ineligible based on a novel legal theory about Section 3 and end their candidacies.
Conservatives argue that Section 3 could apply to Vice President Kamala Harris, for example — it was used to block from office even those who donated small sums to individual Confederates. Couldn’t it be used against Harris, they say, because she raised money for those arrested in the unrest after the murder of George Floyd by Minneapolis police in 2020?
Is this a partisan issue?
Bellows is a Democrat, and all the justices on the Colorado Supreme Court were appointed by Democrats. Six of the 9 U.S. Supreme Court justices were appointed by Republicans, three by Trump himself.
But courts don’t always split on predictable partisan lines. The Colorado ruling was 4-3 — so three Democratic appointees disagreed with barring Trump. Several prominent legal conservatives have championed the use of Section 3 against the former president.
