Capt Melwyn Noronha, CEO of Shipping Australia writes:
International geopolitics presented global shipping with an unwelcome development in the run-up to Christmas: drone and ballistic missile attacks on ships in the Red Sea.
I have sailed that waterway many times as a commercial seafarer during times of armed conflict. Transit during such times is tense. You don’t want the moon to be out because it’s easier for attackers to see your ship. And you are just constantly waiting for the first ‘bang’.
The geography helps attackers.
The southern end of the Red Sea is particularly narrow – it’s about 28km wide at the strait of the Bab-al-Mandeb, commonly translated from Arabic into English as “the Gate of Tears”. And, excluding islands, the Red Sea is about 362km wide from the northernmost part of coastal Yemen to the coast of Eritrea on the opposite shore. It’s pretty sobering to then realise that the maximum range of Houthi missiles is up to 1,000 km.
Naval forces have attempted to defend cargo ships and there have been skirmishes in the Red Sea. It remains to be seen how effective naval tactics will be at defending trade and how reassured commercial shipping will be. So far, the signs are that merchant ships can still be attacked while under naval protection and that shipping companies are not reassured – ships are being routed around Africa instead.
There’s a lot at stake. About 12% of global trade, 30% of the global container trade, and over US$1 trillion of goods and just under 19,000 vessels each traverse the Suez Canal, which lies at the northern end of the Red Sea. Not all of the trade and ships that transit Suez are destined to pass through the Bab-al-Mandab as there are many Red Sea import / export ports such as Jeddah (Saudi Arabia) and Sokhna (Egypt, roughly 39km south-west-by-south from the southern entrance to the canal).
So it’s fair to say that the Canal is one of the most vital arteries for world trade – it’s particularly important for the Asia-Europe trade.
The direct effect on Australia will be limited. About 12% of our global box trade is with Europe and that will be highly affected. There is also a dry bulk trade with Europe too. But most of our car, box, grain, iron ore, coal and other trades are with Asia. Inevitably, as we explain later on in this Annual Review, Australia will be indirectly affected.
Capt Noronha also discusses general market freight rates, industrial relations and the consequences thereof, the Maritime Single Window, decarbonisation, biofouling, and the Strategic Failure Fleet, among others.
Read Capt Noronha’s full insight here:
