Houthi attacks reduce shipping on Africa's key trade route by 57%

Import-reliant countries in Africa, such as Kenya, are likely to continue witnessing increased shipping costs of essential commodities as attacks on cargo ships at the Red Sea by the Houthi rebel group escalate.

The latest data from PortWatch shows that ongoing attacks are increasingly disrupting cargo and tanker ships. PortWatch is a group that monitors the operations of all shipping, storage, and cargo handling, specifically concentrating on the impact and risk of such activities on the environment and the quality of life in surrounding communities.

Year-to-date, the attacks by the Houthi rebels have cut the weekly shipping average through the Suez Canal, Africa's shortest link to the East and West, by 57 per cent.

"The seven-day moving average for both cargo and tanker ships has reduced from 75 ships in July last year to 32 as of July 23 this year," says the report.

The figures point towards reduced shipment of essential commodities from exporting countries into Africa, driving up demand, which consequently pushes up prices.

Consumers in the susceptible countries are currently grappling with heightened prices of commodities on the back of increased freight costs occasioned by the re-routing through the Cape of Good Hope.

The Houthis are targeting ships from pro-Israel countries to pressure for a ceasefire in the Gaza Strip. They have pledged to continue these attacks until Israel ceases its aggression in the contested region.

Attacks on commercial ships prompted shipping companies to re-route traffic away from the Red Sea, a systemically important shipping lane that facilitates about 15 per cent of global maritime trade volume and over 22,000 transit calls annually.

As a result, container freight rates have gradually increased since November last year.

Ships at Saleef port in the western Red Sea Hodeida province (Photo: AFP)

Data by Statista shows container freight rates oscillated dramatically between January 2023 and March 2024. 

Freight rates slumped to their lowest level on October 26, 2023, when the going rate for a 40-foot container was only $1,342 (Sh176,566).

"Since then, the global freight rate has generally increased, hitting over $5,800 (Sh763,106) in June 2024, the highest value on record," Statista says.

This has since occasioned big shifts in the shipping industry.

The negative effects of the vessel attacks could likely negate the calmness in inflation witnessed in Kenya in the past months, when the country recorded a decline in fuel and some food item prices, bringing the level of inflation down to 4.6 per cent in June.

Inflation was expected to ease in 2024 after more than 18 months of interest rate hikes by central banks—the most aggressive monetary tightening in decades.

However, the attacks by Houthi rebels now threaten to push up the cost of living again.

The attacks from the Israel-Palestine dispute in the Gaza Strip are now in their eighth month. 

Since the first attack in November last year, data shows the numbers have risen to about 70 as of this month.

As a result, African citizens are the ones paying the price of delays, more expensive consumer goods, disruption to local economic entities and polluted waterways.

The developing countries also risk having unpredictable business environments in the long run if the disruptions escalate further.