Skip to content Skip to Search
Skip navigation

Red Sea attacks could harm more than ports and shipping

The Houthi strikes could have serious implications for Saudi Arabia and Egypt

The Galaxy Leader cargo ship is escorted by Houthi boats in the Red Sea. The attacks are reducing Suez Canal traffic via Reuters
The Galaxy Leader cargo ship is escorted by Houthi boats in the Red Sea. The attacks are reducing Suez Canal traffic

A chain is only as strong as its weakest link and, again, expectations in the global supply network have been confounded, this time by the efficacy of Houthi attacks on shipping headed from the Red Sea through the Bab Al Mandeb Strait and into the Suez Canal. 

Shipping businesses – and container lines in particular – are now facing up to the reality that the attacks are likely to be more deleterious than the episode three years ago when the Ever Given mega-vessel blocked the Suez Canal.

The incident lasted less than a week, but Egypt’s Suez Canal Authority said it lost $15 million a day in transit fees.

While the early Houthi attacks in November targeted vessels that the assailants claimed were associated with Israeli interests, the stakes have widened to include American and British targets since the launch in December of the US-led Operation Prosperity Guardian.

Houthi officials have, however, explicitly stated that Russian and Chinese shipping interests will be safeguarded from attack.

Several container lines, including MSC, Maersk and CMA CGM, have elected to avoid Red Sea routings and diverted sailings around the Cape of Good Hope. This adds 39 percent to sailing distances between Singapore and Rotterdam, for example. Dry bulk and tanker operations have also been affected. 

As 2024 unfolds, this could have serious implications for the ports, shipping and other interests of Red Sea littoral states, in particular Saudi Arabia and Egypt.

The Saudi Ports Authority (Mawani) has studiously avoided making any reference to the Red Sea attacks, but they are likely to have an adverse effect on operations at Jeddah Islamic Port, the kingdom’s largest container gateway, and the trans-shipment hub at King Abdullah Port, north of Jeddah. 

Mawani said this month that kingdom-wide throughput increased 9 percent in 2023 to 11.4 million 20-foot equivalent units (teu), an industry benchmark, up from 10.4 million teu in 2022. It has pledged to reach 40 million teu by 2030.

The already slow pace of expansion to meet Vision 2030 goals is now likely to be further complicated. 

Oil export facilities at Yanbu further north provide up to 7.5 million barrels per day of capacity, and storage for 10 million barrels of oil, according to the US Energy Information Administration.

Yanbu Commercial Port handles imports of containers, bulk fertilisers and feed, cement and petrol, as well as exports of clinker (a precursor of cement), zinc, petrochemicals and used oils.

In September 2022 Hutchison inaugurated the Port of Jazan City for Primary and Downstream Industries, which includes commercial and industrial berths.

The Saudi government has also announced that it intends to develop a major facility to serve the Neom development, known as Oxagon, and expected to have a capacity of up to 9 million teu by 2030.

Impact on giga-projects and Egypt’s economy

Ports are not the only assets threatened. Crown Prince Mohammed bin Salman has set his heart on the development of tourism, particularly on the kingdom’s north-west coast.

“For Saudi Arabia’s Public Investment Fund, the situation has a significant risk to the array of giga-projects under its umbrella, most of which lie along the Red Sea coast – and are within range of Houthi drones and cruise missiles,” Global SWF, which tracks sovereign wealth funds, said on January 16. 

In Egypt, the loss of Suez Canal revenues, which totalled $9.4 billion in the latest financial year, is likely to be the most immediate threat to an already weak economy.

Statistics from the IMF’s PortWatch platform showed a 20 percent drop in ships using the canal between December 24 and January 2, compared with the same period a year earlier.

The New York Times, citing data platform Marine Traffic, has reported a steeper decline. The newspaper said this month that canal transits had fallen from 400 in the first two weeks of 2023 to 150 over the same period this year.

It is likely that tanker lightering (moving oil or other cargo from a vessel to reduce its draft) using the Suez Mediterranean – or Sumed – pipeline has also been affected.

The World Trade Organisation, citing the Wheat Dashboard it produces in association with the International Grain Council, said on January 19 that an increasing number of shipping vessels had been rerouted in the past two weeks.

This caused a nearly 40 percent year-on-year drop in shipments of wheat through the canal, to around 500,000 metric tonnes, according to the WTO.

Egypt is contemplating an increase in port capacity from around 11 million teu in 2022 to 19 million teu in 2024. Major port installations in operation include the DP World-operated Ain Sokhna Port, south-west of Suez, and the massive Suez Canal Container Terminal at Port Said on the Mediterranean.

Egypt also has more than 20 ports, most of them second-tier, on the Red Sea – and all of them are likely to be affected. Growing Chinese industrial interests, especially around the Suez Canal Zone, are likely to feel an impact too.

Peter Shaw-Smith is a Dubai-based freelance journalist with expertise in logistics, and the Middle East correspondent for

Latest articles

Musicians perform at the Sharjah Ramadan Festival. Retailers offered discounts of up to 75% on local and international brands

Sharjah’s Ramadan retail sales peak at nearly $110m

Ramadan retail sales in Sharjah hit a new record high of AED400 million ($109 million) in 2024, reinforcing the positive outlook UAE companies had ahead of this year’s holy month. Sales jumped 25 percent year on year during the Sharjah Ramadan Festival 2024, which concluded last Saturday, the UAE state-run Wam news agency reported, quoting […]

The UAE wants dialogue to address the ripple effects of geopolitical challenges on global trade

UAE to advance talks on debt sustainability at global event

The UAE’s finance ministry intends to advance discussions on global macroeconomic stability and debt sustainability at the 2024 Spring Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG). The spring meetings will be held in Washington, D.C., from April 15 to 20. The UAE will also promote a dialogue to address […]

A woman buys cooking oil at a market in downtown Cairo, Egypt

EU to provide ‘urgent’ $1bn short-term aid to Egypt

The European Union (EU) will provide €1 billion ($1.1 billion) in urgent short-term financial aid to support Egypt’s economy. The funding is part of the larger €5 billion macro-financial assistance package.  The remaining €4 billion will be released as longer-term assistance over 2024-2027 but is yet to be cleared by the 27-member bloc. The aid […]

Adnoc sought advice from investment banks on buying a significant stake in BP, a media report said

UAE’s Adnoc explored acquiring BP

Abu Dhabi National Oil Company (Adnoc) explored the possibility of acquiring British oil major BP but abandoned the plan as it did not fit into its strategic growth objectives, a media report said.  The talks did not advance beyond the initial stages, Reuters reported, citing informed sources.  The UAE state oil company also sought advice […]