Washington and London Severely Disrupted by Expanded Yemeni Naval Operations

The Yemeni military operations in support of the Palestinian people have inflicted severe economic losses on both the American and British economies, particularly with the onset of the fourth phase of escalation.

According to the Washington Institute for Near East Policy, the fourth phase of escalation against ships from Yemen has been the most lethal, due to the expansion of the target list to include all ships of any company that docks its vessels in Israeli ports. The institute noted that the Houthis, Ansar Allah, feel empowered, not weakened, and continue to identify targets for companies to avoid sending ships to the region, despite enduring months of American and British strikes.

The Washington Institute stated, “Expectations are for continued attacks from Yemen, with many commercial ships likely to avoid the Gulf of Aden and the Red Sea until 2025 or beyond. A ceasefire in Gaza could mitigate the intensity of these attacks.”

The New York Times commented on the Yemeni naval operations supporting Gaza, highlighting that these operations have caused significant disruptions in shipping and supply chains to the United States. This includes a nearly fourfold increase in shipping costs since last December, along with significant delays in the delivery of raw materials.

The newspaper elaborated that this disruption could also exacerbate inflation, a major economic concern influencing U.S. presidential elections. Since October, the cost of transporting a 40-foot shipping container from China to Europe has risen to about $7,000 from an average of around $1,200, according to data collected by Xeneta, a market data analytics company based in Norway.

The New York Times also reported that Pacific freight rates have doubled. Currently, transporting a 40-foot container from Shanghai to Los Angeles costs over $6,700, and nearly $8,000 from Shanghai to New York, compared to close to $2,000 in December last year. The newspaper emphasized the growing concern that no one knows how long the current disruption will last or how it will end.

Similarly, the U.S. Mission to the United Nations reported that the Houthis, Ansar Allah, launched additional complex attacks against ships in the Red Sea, Gulf of Aden, and surrounding waterways in recent weeks, calling for a halt to these increasingly sophisticated attacks.

The Wall Street Journal reported that British retail company DFS Furniture halved its profit forecast this month, largely due to “ongoing issues with rerouting ships away from the Red Sea, causing delays in customer deliveries and increased shipping costs.” The company stated that approximately $18 million worth of its goods were delayed due to disruptions related to the Red Sea.

The Israeli economic website Globes mentioned that the cost of transporting a single container from East Asia to Israeli ports in occupied Palestine was $1,490 before the war, and in January 2024, it rose to at least $6,773, a 3.5-fold increase from pre-war levels.

The British Chamber of Commerce reported that 55% of exporters and 53% of manufacturers and consumer service companies, including retailers and wholesalers, experienced disruptions. Overall, 37% of all companies reported being affected. William Payne, head of trade policy at the British Chamber of Commerce, stated, “The longer the current situation persists, the more likely cost pressures will begin to accumulate.”

Reuters reported that British companies stated that container rental costs had quadrupled, while other companies faced delivery delays of three to four weeks, as well as cash flow difficulties and a shortage of spare parts. The Bank of England indicated that Red Sea disruption is one of the main upside risks to inflation this year. The Standard & Poor’s Purchasing Managers’ Index showed that British companies’ costs rose at the fastest rate in six months in February.