Alert 184 – Red Sea security crisis brings threats and opportunities to Africa

Yemen’s Houthi Movement declared on 15 January that it would expand its targets in the Red Sea to include United States (US) vessels. This marks a further escalation in the ongoing Red Sea security crisis and will likely lead to further disruptions to this vital shipping route. The coverage of this crisis and its fallout has naturally focussed predominantly on Yemen and the role of international security forces deployed to combat the Houthi Movement’s attacks, but it has significant ramifications for Africa replete with clear economic threats and even potential opportunities.

The Yemen-based Zaydi Shia Islamist militant Houthi Movement began attacking commercial shipping vessels transiting the Red Sea and the Bab-el-Mandeb strait on 19 November when Houthi militants boarded and captured the British-Israeli-owned Bahaman-flagged vessel, the Galaxy Leader. Since then, the group has staged ongoing missile, drone, and maritime attacks on vessels in the southern Red Sea, the Gulf of Aden, and the Bab el Mandeb strait, which connects the two. The militant group has stated that it is orchestrating these attacks in response to Israel’s war on Gaza which was launched in response to the 7 October terrorist attack by the Palestinian Islamist group, Hamas.

In order to stop the Houthi attacks, the US announced the deployment of a ten-country operation dubbed Operation Prosperity Guardian on 18 December. However, as yet, this deployment appears to have escalated the situation with the Houthi Militants launching attacks on these naval vessels as well as commercial vessels.

As a result of these attacks, major global shipping firms announced that they would cease operations through the Red Sea trade route and, instead route traffic around South Africa’s Cape of Good Hope, adding an estimated 10 to 14 days to the journey. Among the firms which suspended their operations are Denmark’s Maersk, Italian-Swiss firm MSC, Germany’s Hapag-Lloyd, and Frances’s CMA CGM. These four firms account for the majority of global container traffic, especially that which transits the Red Sea. These firms are continuing to avoid the Red Sea as of 16 January.

The Red Sea trade route is among the most important in the world. Annually, 30% of container traffic and 12% of all global trade transits this route which is essential for trade between Europe, Asia, and the wider Indian Ocean area. As such, the current security crisis has caused substantial disruptions and cost increases in the global shipping industry.

This crisis has also had significant negative impacts on maritime trade in East Africa. Most maritime traffic between East Africa and Europe traverses the Bab-el-Mandeb Strait and the Red Sea. As such, the current crisis is impacting exports from major East African ports such as Mombasa, Dar es Salaam, Mogadishu, Berbera, Assab and, most importantly, Djibouti. The Port of Djibouti is a major maritime trade hub and is located at the entrance to the Bab-el-Mandeb Strait. The port often is used as a node to connect Europe and the Levant to other East African and Asian ports. Hence, this crisis is affecting exports from all states dependent fully or in part on these East African ports, including Burundi, the Democratic Republic of Congo (DRC), Eritrea, Ethiopia, Kenya, Rwanda, Somalia, Tanzania, Uganda, and Zambia.

Continued disruptions to trade through the Red Sea will force these states to use longer trade routes, rerouting trade to and from Europe and the Levant via South Africa. This will increase the cost of trade, reducing these states’ comparative advantages, and drive increased inflation in key imported goods and commodities, including food.

The sudden need to reroute the Red Sea’s maritime trade around Africa has also placed unexpected pressure on the continent’s ports. As early as 22 December, vessels were struggling to find reliable harbours where they could refuel and restock without incurring prolonged delays and the resulting costs. Notably, this crisis also occurred during a period when South Africa was experiencing its own localised ports and logistics crisis defined by prolonged backlogs at the country’s harbours. This is a result of prolonged mismanagement and skills attrition at the state-owned ports and railways company, Transnet. The prolonged backlog at South Africa’s ports forced the country’s revenue service to order a moratorium on offshore bunkering operations. As a result, one of the few Sub-Saharan African countries that have the capacity to assist the rerouted vessels was unable to do so in a meaningful way and several vessels opted to add additional travel time and stop at Port Louis (Mauritius) to refuel.

As the situation persists it presents an opportunity for countries with ports along Southern and West Africa. South Africa has largely addressed its 2023 backlog crisis and should be able to process more ships that are rerouted via the Cape of Good Hope. Other countries that could potentially economically benefit from this crisis include Namibia, Côte d’Ivoire, Ghana, Senegal, and Nigeria. However, these states will need to actively work to improve their port operations and offshore bunkering services to truly take advantage of the gap.

The security situation in the Red Sea appears to be deteriorating. Operation Prosperity Guardian has launched retaliatory attacks on Houthi targets inside Yemen itself, and the militant group appears set to become even more indiscriminate in its attacks on vessels transiting the area. In the long term, this military deployment will likely succeed in restoring a sufficiently safe operating environment to alleviate the concerns of the major shipping companies. This may even require providing armed escorts to vessels traversing the route. However, the current situation will persist for several weeks if not months leading to prolonged disruptions to shipping through the Red Sea. As a result, the negative impact on East Africa’s maritime trade with Europe and the Levant will persist and the region will see a rise in the cost of imported commodities in the coming weeks. This crisis has highlighted the vulnerability of the Red Sea trade route and the outsized impact targeting ships along this route could have. The Middle East appears to be embarking on yet another period of heightened instability and there is a real possibility that this could lead to further attacks on vessels in the Red Sea and Bab el Mandeb Strait even once this current crisis passes. As such, countries with ports along southern and western Africa should seek to increase the competitiveness of these ports in order to benefit from any future crises.