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More Shippers Avoid Red Sea Amid Attacks

The list of companies pausing shipping via the Red Sea continues to grow following Houthi terrorist attacks on vessels, CNBC reports.

What’s going on: British energy company BP said Monday it would stop shipments through the waterway temporarily, and Norwegian energy firm Equinor said it had rerouted its ships from the area.

  • To avoid the Red Sea, “[s]hips will instead take the longer Cape of Good Hope route around the south of Africa.”
  • U.S. Defense Secretary Lloyd Austin, in Israel to meet with leaders about the war with Hamas, issued a new military initiative on Monday aimed at “ensur[ing] freedom of navigation in the area,” UPI reports.

Why it’s important: The route changes could have a significant effect on global supply chains, analysts say.

  • “Compounding the pressure on global trade routes is the fact that access to the Panama Canal, another key route, is severely restricted due to low water levels,” a container research expert told CNBC.
  • For cargo owners, the Red Sea disruptions “could mean either longer lead times for goods to arrive or having to pay more to justify carriers traveling faster,” according to CNBC.

Less capacity: Taking the Cape of Good Hope route cuts the capacity of an Asia-to-Europe trip by 25%, analysts said. 

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