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A.P. Moller-Maersk (OTCPK:AMKBY) has halted Red Sea shipping for 48 hours to size up the current security situation in a vital waterway responsible for a sixth of world trade.
A U.S.-led naval task force, called Operation Prosperity Guardian, was formed with 20 other nations in December to protect commercial vessels from Yemen’s Houthi rebels, but it doesn’t look it is currently deterring attacks from taking place in the Bab el-Mandeb Strait.
Over the weekend, the Maersk Hangzhou issued two distress calls in less than 24 hours. In the first incident, the container ship was struck by a missile as it was transiting the Southern Red Sea. It was then surrounded by four boats originating from Yemen whose crews attempted to board the vessel. The U.S. Navy responded by sinking three of the Houthi boats, while the fourth fled the area.
A report from The New York Times also suggests that pressure is building on the Biden administration to strike missile and drone bases in Yemen to re-establish American deterrence. Keep an eye on shipping stocks in the sessions ahead as investors size up freight rates and additional war risk premiums.
Related tickers: Hapag-Lloyd (OTCPK:HPGLY) OOCL (OTCPK:OROVY) Danaos (NYSE:DAC), Global Ship Lease (NYSE:GSL), ZIM (NYSE:ZIM), Matson (NYSE:MATX) and Navios Maritime Partners (NYSE:NMM).