CSC's Kazakos sounds the alarm over Houthi pirate threat to the global supply chain

The Director General of the Cyprus Shipping Chamber, Thomas Kazakos, has sounded the alarm about the effects of the Houthi attacks on international shipping in the Red Sea, underlining that if the situation is not addressed, the cost of the disruption in the global supply chain may exceed this of the coronavirus pandemic.

Speaking to CNA, Kazakos emphasised that the new disturbance in maritime trade, if not dealt with, will have more obvious effects on an island state, such as Cyprus, where 98% of trade is carried out by sea.

Since the outbreak of the conflict between Hamas and Israel in the Gaza Strip, Yemen's Houthi rebels have launched repeated attacks against commercial ships they say are linked to Israeli interests or bound for Israeli ports. However, as the new Secretary General of the International Maritime Organization, Arsenio Domíguez, said on 3 January, this no longer appears to be the case, with attacks expanding more generally.

Already 18 major shipping companies have announced they are ending transit through the critical sea passage, which Dominguez estimates accounts for about 15 percent of international trade. These include giants Maersk, Happaq Lloyd and MSC.

Kazakos said that 'Operation Prosperity Guardian,' a US-led military operation by a multinational coalition formed in December 2023 to respond to Houthi-led attacks on shipping, should be further strengthened to protect navigation and seafarers. "More reinforcement of both naval and air forces is needed with clear orders to provide protection," he said.

"For us," added Kazakos, "the issue is the unhindered passage of commercial ships. This is not just about consumer goods which may have a delay in their delivery, but basic commodities such as fuel, wheat and iron, pharmaceuticals, which can have a huge impact on economies, on top of inflationary pressures."

As he explained, bypassing the Suez Canal, a critical sea route from Asian countries to Europe, constitutes "a serious delay in travel time, increased fuel consumption costs, increased delay in delivery time and increased freight."

"This issue will have knock-on effects, the increases that will come will be significant and some commentators have said they will be worse than the last time we had a fare increase at the beginning of the coronavirus pandemic," he said, adding that there will be a "multiplicative negative effect."

As Kazakos said, if this problem is not solved immediately, as early as in the coming weeks, maybe even days, the increase in oil prices will begin to be felt with an increase in transport costs, and this will be passed on to importers, consumers and the national economy of each country.

Armed guards are not enough

According to Kazakos, many of the shipping companies are not risking approaching this sea passage. He added that it is not enough to have armed men on the ships, as was the case during the period of the outbreak of piracy in the region.

The transfer of weapons is legal and Cyprus had taken the lead with the adoption of relevant legislation that was considered a model in the adoption of national legislation by other states, but "what will an armed guard do", since as Kazakos said, attacks are also carried out using drones, something which is difficult to detect by the ship's systems as well as by the forces patrolling the area.

"The international outcry from the global shipping family is a given, we all emphasise the need for immediate involvement by naval and air forces. For us, the message is clear. The international community has an obligation to provide support and protect global trade, which is 90% dependent on global shipping," Kazakos underlined in conclusion.

(Source: CNA)