Odd Lots How Global Shippers Are Dealing With a Worsening Red Sea Crisis
Feb 1, 2024
Sal Mercogliano, a maritime historian and Campbell University professor, dives into the escalating crisis in the Red Sea. He discusses the impact of Houthi attacks on shipping, rising insurance costs, and operational dilemmas faced by shipping companies. Mercogliano sheds light on military responses to secure vital trade routes and highlights historical context, including the U.S. Navy's role. The conversation also covers shifts towards regional shipping solutions and their implications for global trade and logistics.
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Route Decision-Making
- Shipping companies decide routes, considering insurance, safety, and escort availability.
- CMA CGM, a French company, chose the Red Sea route despite high insurance due to naval escorts and high cargo value.
Naval Protection Strategies
- Navies, including the U.S., British, French, and Indian, are protecting ships in the Red Sea.
- They use destroyers as 'fence posts' to intercept missiles and provide direct escorts.
Transit Experience and Security
- Ships transiting the Red Sea now take on private security detachments for protection against small boats and drones.
- Crews experienced 'excitement' during attacks but praised Navy support, though communication issues exist.
