Earlier today, reports emerged about the latest thwarted attack on merchant shipping on the Bab el-Mandeb Strait when American Warships Neutralize Houthi Missile Attack in Vital Shipping Lane. Attacks on merchant vessels passing through this critical trade route have continued despite increased presence of coalition forces in the region. While many vessels have elected to take safer passage around the Cape of Good Hope, the longer voyages have placed critical strain on the supply of ships forcing some operators to take the added risk of coming under fire from Houthi forces set on disrupting western interests.
Initially, the attacks by the Houthis on merchant ships were viewed as a rebuke of the war in Gaza. The equipment used was generally seen as being relatively crude, easy to replicate, and dangerously disruptive when considering that it was costing coalition forces millions of dollars to counteract weapons costing just a few thousand dollars to make. We have since learned that the attackers are very well funded, and the technology being used is increasingly more advanced making it more difficult to defend, even for the most advanced naval forces. More recently, it was brought to light that the Houthis are likely receiving critical intelligence on vessels transiting the region from Russia signaling yet another evolution in unconventional warfare.
The cost of defending the shipping lanes pales in comparison to what relatively little costs it takes to create the disruptions and so we are seeing firsthand what governments intent on disrupting western interests can accomplish at a relatively low cost and even lower risk by putting weapons in the hands of people with seemingly nothing to lose. Coalition forces are winning the battle, but at a significant cost to taxpayers who are ultimately footing the bill and seeing the added cost of these disruptions reflected in the cost of everyday goods.
If we have learned anything in the past five years, shipping is not just critical to supporting our everyday lives, but it is extremely vulnerable. We saw that firsthand in the early days of the COVID-19 Pandemic and again in 2023 and 2024 with disruptions in both the Panama Canal and Red Sea. With seemingly no end in sight for the security concerns in the Bab el-Mandeb Strait, we as consumers must be prepared for continued volatility and higher transportation costs until the situation can be brought under control.
It remains to be seen what, if anything, the incoming U.S. administration will do to address the broader security concerns in the region. More importantly, would a ceasefire and/or peace agreement in Gaza bring about and end to the attacks? Will the proxy governments funding the attacks and providing critical intelligence continue to do so despite a resolution? Only time will tell, but it is hard not to imagine how this new form or warfare will influence commerce, vessel security, trade patterns, and underwriting risk in the future.
By Patrick J. Quincannon
President, CEO
Quincannon Associates