How Houthi Rebels from Yemen Are Disrupting the Global Supply Chain

How Houthi Rebels from Yemen Are Disrupting the Global Supply Chain

Since the outbreak of war in Israel in October 2023, there is an increasing threat of the conflict expanding across the region. A regional war not only endangers global security but threatens the movement of global supply chains through the Suez Canal, which accounts for 12% of world shipping traffic. Though the war currently remains within Israel’s borders, this threat has already materialized. The Yemeni Houthi militant group began launching attacks on shipping vessels in the Red Sea and Gulf of Aden in November 2023, claiming to target ships associated with Israel, the U.S. and U.K., substantially disrupting global trade coming through the Suez Canal.

Who are the Houthis?

The Houthi Rebels are an Iranian-backed Shia Islamist Yemeni political and military organization that came onto the regional political scene in the 1990s out of opposition to the then-President of Yemen, Ali Abdullah Saleh. The group has since led several insurgencies, including the Yemen Revolution of 2012. They have been in de-facto civil war with the internationally recognized Yemeni government since 2012, though they now control most of Yemen.

The official Houthi slogan is, “God Is the Greatest, Death to America, Death to Israel, A Curse Upon the Jews, Victory to Islam,” which sums up their purpose very clearly. In line with their mission, when the Israel-Hamas War broke out suddenly in October, the Houthis took advantage of Israel’s weak position and fired missiles into the country. 

Houthi Attacks on Cargo Ships

The Houthis do not at present have missiles capable of reaching Israel proper. They do have a stockpile of weapons capable of reaching vessels passing along their border, from the Suez Canal south to the Baab al-Mandeb and into the Gulf of Aden, which feeds into various Asian port cities. This passageway is the shortest sea-route from Europe to Asia and saves vessels the longer journey of going around the Cape of Good Hope, South Africa. In normal times, the Suez Canal accounts for 12% of the world’s trade passages and 40% of Asia-Europe trade, but today, ships are avoiding the canal and detouring around South Africa. The detour typically extends the shipping of oil and goods by about two weeks, increasing fuel and shipping costs and slowing supply chains.

Since November 19, 2023, the Houthis have attacked at least 27 cargo and carrier ships. Despite their claims otherwise, their attacks do not appear to exclusively target Israeli, American, and British vessels. To speak nothing of the loss of human lives and property damage, Houthi attacks are changing the face of global trade. 

For more information on details of attacks on shipping vessels to date, see the Washington Institute’s interactive map.

According to the Kiel Institute for the World Economy in Germany, as of January 2024, the volume of containers transported in the Red Sea was almost 70% below the norm, and the cost of shipping a standard 40-foot container from China to northern Europe has increased from $1500 to $4000. 

The new routes are also causing significant production delays in various industries around the world. For example, Tesla’s Germany factory announced that it needs to temporarily halt production. . Shell’s CEO confirmed a temporary rerouting of shipping and anticipates a 5-10% price impact in the short-term. Ikea warned that the situation might lead to product shortages. 

And while inflation increases were flattening out in Q4 2023, the new shipping trouble might make them climb up again if this disruption continues for a prolonged period. According to Time, if Houthi attacks continue, they will seriously disrupt the entire global supply chain, specifically by driving up the costs of energy. 

Global Responses 

In December 2023, the US and several other nations announced that they would provide military vessels for umbrella protection for as many cargo ships as possible, although this failed to deter Houthi attacks. 

In early January, the Houthi rebels launched their largest attack on ships in the Red Sea, leading the previously silent but watchful US and UK warships to retaliate. They targeted Houthi missile, radar, and drone capabilities to prevent the group from launching more attacks. This military deterrence strategy is ongoing.

At the end of January, Egypt made a plea to the Houthis to only attack Israeli ships, to little avail. Ships avoiding the Red Sea and Suez Canal are hurting Egypt’s canal revenue, which accounts for 2% of national GDP.

What Does the Future Hold?

Over the last two months, the US Treasury has introduced sanctions aimed at disrupting Houthi operations and directly targeting its leadership. 

Still, Houthi rebels have expressed continued commitment to their operations in the Red Sea. As the war in Israel does not appear to be drawing down anytime soon, the EU plans to launch a naval mission to defend ships in the Red Sea in the coming weeks, in addition to continued joint defense maneuvers by the US and UK. As international pressure mounts against Houthi action in the Red Sea and Gulf of Aden, its response – and weapons capabilities – remains difficult to predict, given their Iranian backing.

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