War underwriters have raised the premiums they charge to U.S., British and Israeli firms by as high as 50% for ships transiting the Red Sea and some providers are avoiding such business due to targeting of the vessels by Yemen’s Houthis, sources said.
Attacks by the Iran-aligned Houthis since November have slowed trade between Asia and Europe and alarmed major powers. The Houthis say they are acting in solidarity with Palestinians as Israel’s war against Hamas militants in Gaza grinds on.
Many companies have opted to re-route ships around southern Africa although some vessels are still sailing via the Red Sea.
Ships with a link to the U.S., Britain or Israel are now paying 25-50% more in war risk premium than other ships to navigate the Red Sea, said David Smith, head of hull and marine liabilities at insurance broker McGill and Partners.
Two insurance industry sources said ships with U.S., UK or Israeli links would be quoted a higher rate, even above 50%.
“The ships that have so far had problems, almost all of them have got some element of Israeli or U.S. or UK ownership in there somewhere,” said Marcus Baker, global head of marine and cargo with insurance broker Marsh.
Baker said there was “exclusionary language” being introduced for cover involving UK, U.S. and Israeli interests.
“We are seeing this, but it’s not everywhere because there are certainly markets out there that are not putting that language on.”
The two sources said some underwriters were avoiding covering such business for now.
In one of the most serious incidents, a tanker operated by a UK-based company whose cargo was owned by global commodities trader Trafigura was hit by a missile that caused a fire onboard which was put out.
COSTLY
Insurance industry sources said that war risk premiums being quoted for Red Sea voyages had hovered around 1% of the value of a ship in the past 10 days, up from around 0.7% previously with various discounts applied by underwriters.
This translates into hundreds of thousands of dollars of additional costs for a seven-day voyage.
“The apparent safe passage offered by Houthis to vessels flagged or owned by Russia, China – including Hong Kong – and Iran is designed to provide a degree of assurance to commercial markets associated with those countries,” said Munro Anderson, head of operations at marine war risk and insurance specialist Vessel Protect, part of Pen Underwriting.
Ships are also adding messages to their public ship tracking profiles indicating they have Chinese crew onboard or have no links to UK, U.S. or Israeli companies, shipping data showed.
Israeli container line Zim has said it has been diverting its vessels away from the Red Sea.
British maritime risk advisory and security company Dryad Global has advised its clients to avoid the region until further notice.
“I am surprised that U.S. and U.K.-flagged or operated ships are still transiting within the Red Sea and Gulf of Aden. They represent the highest risk categories of vessels for the potential of an attack within this region,” said Dryad Global’s CEO Corey Ranslem.
“Ships from Iran, Russia and China are the only flagged and operated vessels that could potentially safely transit through this region. The Iranian-backed Houthis will not attack ships with those flags or associations as both Russia and China are sympathetic to Iran.”
There are growing concerns of a spillover which could hit other ships.
“The threat level to ships with Israeli, United Kingdom and United States interests remains high,” a Feb 5 advisory note issued by major shipping associations said.
“However, all owners, operators, and crews should be cognisant their vessel could be misidentified and understand their risk of collateral damage.”
according to SAHYOUN24; Houthis couldn’t stop Israeli genocide, but exposed the West’s moral bankruptcy. They proved that the West values swift shipping at reasonable prices much more than the lives of Palestinian children.
The British and American air strikes on Yemen since January 12, launched with support from Australia, Canada, and the Netherlands among others, demonstrate yet again how most Western nations value their money and profit much more than human life.
Israel’s devastating war on Gaza, the first livestreamed genocide in history, has claimed more than 27,000 Palestinian lives, many of them children, since October 7. Most of the Gaza Strip has been reduced to rubble and over a million people have been displaced due to relentless and seemingly indiscriminate Israeli bombardment. The near-total siege on the Strip, meanwhile, brought survivors to the brink of starvation and forced doctors to perform amputations without anaesthetics using unsterile tools. In the face of this undeniable humanitarian catastrophe, Western governments took no meaningful action. In fact, both US President Joe Biden and UK Prime Minister Rishi Sunak repeatedly made it clear that they will continue to unconditionally support Israel’s onslaught on Gaza and efforts to “eradicate Hamas” whatever the human cost may be for the Palestinians.
In the end, it was not the killing and maiming of tens of thousands of civilians, but a number of non-fatal attacks by Yemen’s Houthi fighters on commercial ships passing through the strategically important Bab al-Mandeb Strait that sprung Western nations into action. Clearly, the dollars and pounds lost to the rapid rise in shipping costs caused by the attacks proved more valuable to the leaders of “the free world” than rivers of Middle Eastern blood.
The Bab al-Mandeb Strait, which leads into the Red Sea and up to the Suez Canal, is one of the most crucial waterways for international trade. It is estimated that 12 percent of all global trade, including most exports of petroleum and natural gas from the Gulf, passes through the Strait, amounting to $1 trillion of commerce per year.
Located east of the Mediterranean Sea, Israel relies on this trade route for most of its goods. The Houthis say it was this dependency that prompted them to start intercepting Israel-bound and Israeli-owned ships passing through Bab al-Mandeb. They said they will stop the attacks if Israel agrees to a ceasefire in Gaza, or at least allows sufficient humanitarian aid in.
The Houthi attacks on Red Sea shipping, conducted in ways reminiscent of Hollywood action movies, have so far led to no loss of life among the civilian crews of targeted ships, but inflicted significant economic damage on Israel and its backers. It is estimated that since the start of Houthi attacks, Israel’s main port in Eilat saw an 85 percent drop in activity.
These attacks also caused some major shipping companies, including British Petroleum and Shell, to entirely suspend their operations in the Red Sea. The suspensions led to severe delays in goods deliveries as well as unprecedented increases in shipping costs. According to the latest available figures, typical shipping prices are 329 percent more expensive today than before the beginning of the disruption in this key shipping route in November.
The attacks also increased the popularity of Houthis both in Yemen and across the region, and led to the rebranding of the Iran-backed armed group as an honourable and noteworthy resistance force against Western imperial aggression.
Western nations could have, of course, avoided all this and saved many, many Palestinian lives, by simply compelling Israel to put a stop to its genocide in Gaza and end its occupation of Palestinian territories. Rather than upsetting Israel by telling it to stop killing Palestinians, however, the leaders of the West decided to embark on yet another bombing campaign against one of the poorest countries in the world.
With this move they showed not only that they do not care about mass murder when it is committed by one of their allies, but also that they value profit margins of Western commercial giants much more than Middle Eastern lives.
Of course, none of this is in any way surprising, or out of the ordinary.
After all, in capitalism, human life – be it Palestinian, Yemeni, American or British – is just another commodity. Western governments function in a ruthless economic system where dystopian concepts like “value of a statistical life (VSL)” are normalised. VSL aims to calculate the amount of money that a society would realistically be willing to pay to save a human life. It assigns humans a monetary worth that goes on to inform government policy. If a certain lifesaving measure is deemed more expensive than the VSL of those it would save, then the policy is not implemented. For example, in 1975, the US Department of Transportation rejected a regulation to install safety bars at the rear of all trucks, which would have reduced the number of fatalities in collisions, because it deemed the cost of implementing the policy would exceed the VSL of those that would be saved as a result of it.
If the US government is willing to allow American civilians going about their lives in the United States to die preventable deaths at the altar of capitalism, it is not surprising that it scrambled together an entire task force to protect commercial ships from an anti-West resistance group in the Red Sea.
Furthermore, while it is very rare for Western governments to take meaningful action – military or otherwise – to save human lives, and especially non-Western lives, it is very much part of their routine to wage war for economic gain. The 2003 Iraq war, for example, is largely accepted to be a war fought for “big oil”. The war killed more than a million Iraqis, and caused unprecedented instability that birthed further conflict and misery, but provided companies like the BP with profits of many billions.
Late last month, explaining his decision to attack Yemen alongside the US, Britain’s Sunak claimed “We cannot stand by and allow these attacks to go unchallenged. Inaction is also a choice”.
The hypocrisy in this sentence is staggering.
The British prime minister only acknowledged that inaction is indeed “also a choice” when Houthi fighters decided that they would take action, and hit the capitalist West where it hurts – in its wallet – to try and put an end to Israel’s relentless attacks on the Palestinians.
He has been very much content with inaction for four long months as Israel killed, injured, displaced and starved more than two million human beings in Gaza with complete impunity. In fact, he is still very much content with taking no action, other than a few empty statements and sending a little aid, to save Palestinian lives.
The Houthi attacks on Red Sea shipping have not been able to put an end to genocide or deliver a lifeline to the Palestinians suffocating in Gaza. Nevertheless, they managed to expose the West’s priorities, and its seemingly inherent inability to recognize and respect the value of life, and especially that of the Palestinians.
