Important update on the Red Sea Crisis

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As global freight forwarders, we take it very seriously to stay informed about various serious geopolitical changes that affect world trade, and at LEMAN we therefore follow the situation in the Red Sea closely.

It is important for us to emphasize that the situation is dynamic, with developments occurring on a daily basis. Currently, it is challenging to envision a prompt resolution leading to a return to normal market conditions. Below we describe what we know, what we do and what we recommend our customers to do.

 

This is what we know

Red Sea incidents and disruptions have prompted ocean carriers to avoid the Red Sea routings and divert freight via Cape of Good Hope or hold vessels voyage at safe waters for further navigation instructions.

The primary danger lies in the Red Sea, where Houthi forces from Yemen, supported by Iran, are targeting ships connected to Israel or the West. The US has formed a coalition to protect shipping in the area, but the US aims to avoid direct military confrontation with the Houthis.

The Houthi militia, controlling Northern Yemen, has so far employed numerous distinct methods of attacks. For instance, targeting and boarding commercial ships by deploying boats from the coast, equipped with heavy machine guns, and utilizing suicide drones of Iranian design designed to fly into, for example, the bridge of a ship, triggering their built-in explosive charge.

Recently, US naval forces deviated from this stance, eliminating the crews of three Houthi boats attacking a container ship. The UK warns of further action if Houthi attacks persist, while an Iranian destroyer enters the Red Sea amid Tehran's refusal to cease support for the Houthis. Possibility of a joint warning by the UK, US, and another European country against strikes in Yemen is considered.

The escalating tensions in the Red Sea have human and economic consequences. This newsletter provides an overview of the situation and highlights concerns about future developments.

The UN Security Council on Wednesday held its first open meeting on the continuing attacks by Houthi rebels in the Red Sea, which are becoming an increasing threat to global trade and the stability of the entire region. At the meeting, the UN Security Council emphasized the seriousness of the situation, and it was agreed that further steps should be taken to help stop hostilities.

 

This is what we do

In the face of challenges such as those posed by geopolitical tensions in key maritime routes like the Red Sea, LEMAN as a global and professional logistics company take immediate and proactive measures to ensure the continuity and security of our customers' shipments.

Flexibility is a cornerstone of our general approach, allowing us to swiftly adapt to evolving circumstances. During these critical times, we are actively and diligently working on implementing alternative solutions that factor in considerations such as time, costs, and environmental impact.

Alternatives like routing shipments from China to Dubai or from China into Long Beach by sea, reloading the cargo and being able to fly it to the final destination becomes viable options. We understand the importance of transparent communication and will directly engage with customers, presenting alternatives that align with their unique requirements. You can read more here 👈

 

This is what we advise our customers to do

Current challenges in the market include volatile freight rates with significant increases, newly introduced surcharges, longer ocean lead times, and container repositioning issues. These factors together create complex and unpredictable conditions affecting the supply chain, requiring careful management and well in advance planning.

A highly effective strategy for risk management during this crisis involves urging suppliers to secure their bookings well in advance. We highly advise suppliers to make their bookings 3-4 weeks prior to the vessel departure.

We sincerely appreciate the understanding and support of our valued customers during these turbulent times. Your cooperation is instrumental in allowing us to navigate through complexities and ensure the continued success of our logistics solutions. Thank you for your trust in LEMAN.