Red Sea: Indian Navy Rescues Cargo Ship Crew After Houthi Strike

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Facts

• The Indian Navy said it diverted one of its warships in the Red Sea region on Thursday to rescue a cargo ship — the Genco Picardy — after it was hit by a Houthi strike. Following the strike on the cargo vessel, which was carrying phosphate rock through the Gulf of Aden, the US military said it targeted 14 Houthi missiles that 'presented an imminent threat' to both 'merchant vessels' and US 'Navy ships.'¹
• The Houthi missile strike, which the group claimed was a 'direct hit,' resulted in a fire on board the American bulk shipping boat, though India said it rescued all 22 crewmembers and extinguished the fire.²
• US Central Command said the Houthis launched a one-way drone from Yemen, striking what it called a 'Marshall Islands-flagged, U.S.-owned and operated bulk carrier ship.' It was the 34th Houthi attack against commercial ships since Nov. 19, and the second one against a US-owned cargo ship this week.³
• The incident occurred a day after the US designated the Houthis a terrorist organization — a move aimed at depriving the group of funding and weapons it uses to target maritime commerce. The strikes along the Suez Canal and the Red Sea have impacted global economies. This includes Ukraine, which claims its agricultural exports are being affected, and Italian ports which fear Mediterranean shipping lanes will be bypassed.⁴
• The attacks have also decreased Egypt's revenue in the Suez Canal by 40% in the first 11 days of January, according to the country's Suez Canal Authority. The World Trade Organization, too, reported that wheat shipments on the canal dropped by almost 40% to 0.5 million metric tons in the first half of the month.¹
• Global business leaders have also raised concerns over the potential inflationary impact of the conflict, with freight rates reportedly having almost doubled since early December. The alternative shipping route, around South Africa's Cape of Good Hope, can add between 10 and 14 days to a cargo ship's journey.⁴

Sources: ¹Reuters.com, ²Archive, ³FOX News and ⁴The Express Tribune.

Narratives

• Narrative A, as provided by EL PAÍS English. If this conflict between the Houthis and the West doesn't end soon, the world could see another round of inflationary spikes. Just as the COVID-era inflation was finally repairing itself, the costs of shipping from Asia to northern Europe have now increased by 173%, and from Asia to the US by 55%. While we haven't yet seen price hikes similar to the COVID peak, economically devastating inflation could very well be on the horizon.
• Narrative B, as provided by New York Times. It's fine to draw parallels with COVID supply chain issues, but it's also important to recognize that shipping bottlenecks at the time were a relatively small part of the problem; the larger issue was decreasing labor participation due to virus fear, which resulted in lower productivity and higher prices. The shipping industry has been significantly hit recently, but don't expect a return to 2021-22. The disruptions caused by the Houthis are manageable.

Predictions