UPDATE 4: RED SEA SHIPPING ROUTES : 5TH MAY 2024

The leader of the Houthi movement (Yemen) called for a further escalation of the attacks on shipping citing the potential attack on the city of Rafah and as Western pressure grows on Hamas to accept the terms of a proposed ceasefire. The statements came during their weekly demonstrations in Sanaa staged on Fridays and after a week of increased assaults targeting commercial vessels and U.S. warships.

“The Yemeni armed forces announce the beginning of the implementation of the fourth stage of escalation,” Houthi spokesperson Yahya Saree announced in a televised speech and in posting on social media. He said it was effective immediately from “the moment of this statement.”

The statement said they were targeting all ships “violating the ban on Israeli navigation,” and heading to Israeli ports in the Mediterranean. They vowed attacks in “any reachable area,” within their range, which some media outlets are interpreting as a threat against ships in the Eastern Mediterranean. That would require a range of nearly 1,200 miles Bloomberg highlights but comes days after a Houthi drone appeared to have struck the MSC Orion in a range of 300 to 400 nautical miles south of Yemen in the Indian Ocean.

The Houthi also threatened to expand their attacks to “all ships and companies that are related to supplying and entering [Israeli ports] of any nationality if a military operation is launched against Rafah” in southern Gaza. 

They said they targeted the MSC Orion container ship Monday in a drone attack in the Indian Ocean as part of their ongoing campaign against international shipping in solidarity with Gaza. Portugal-flagged MSC Orion was sailing between the ports in Sines, Portugal and Salalah, Oman and its registered owner is Zodiac Maritime, according to LSEG data. 

Zodiac is partly owned by Israeli businessman Eyal Ofer. The company did not immediately respond to a request for comment.

SHIPPING LINES AVOID RED SEA BY ALL MEANS

SUMMARY:

• Shipping mostly settles into new normal avoiding the Red Sea.
• The industry has largely become accustomed to longer routes though some ports are still adapting to increased volumes.

The shipping industry has settled into a new normal with routes avoiding the Red Sea according to industry experts, despite the Houthi militant group vowing to escalate attacks in the region. 

Analysis from online freight marketplace Freightos found that while the adjustments made by the industry continued to disrupt, the worst of the backlogs and shortages seen at the beginning of the Red Sea crisis have largely dissipated. 

An update from the company said issues mainly persisted in ports that were now being used more frequently than usual, as shipping operators change their routes to avoid the Red Sea, where the Houthi group have been attacking ships seen to be associating with Israel and the US has been retaliating in Yemen. 

Freightos said: “Some West Mediterranean ports are now being used as transshipment hubs for East Mediterranean-bound containers, leading to some congestion there, and terminals in Colombo, Sri Lanka are also facing some backlogs as volumes have increased there for transshipment to the Middle East.”

ETHIOPIA MULTIMODAL SECTOR

 Summary 

Winning domestic firms due to start operations in six months 

Foreign companies missing from the Government Roll out.

The list of companies awarded the first batch of multimodal logistics operator licenses in Ethiopia features a conspicuous lack of foreign entities as the government’s efforts to liberalize the sector are dogged by security concerns and worries about favoritism. 

Three separate domestic joint ventures received licenses during a ceremony at the Sheraton Addis this week, out of eight domestic bidders looking for a piece of a lucrative market that has long been under the monopoly of the state-owned Ethiopian Shipping and Logistics Services Enterprise (ESLSE). 

It is the culmination of a federal policy revision and executive directive issued by the Ethiopian Maritime Authority (EMA) in 2021, announcing plans to grant multimodal operator licenses to up to five firms including ESLSE. 

The authorities initiated a bidding process in 2022 only for it to fail before the second attempt ended with three licenses granted this week. Panafric Global Logistics Plc, Tikur Abay Transport Plc, and Cosmos Multimodal Operator S.C. are the recipients. 

“The bidding process was open to foreign companies as well. Besides the capital, infrastructure and human resource requirements in the directive, what we mainly required was that the company has to be registered in Ethiopia and form a joint venture,” Abdulber, one of the Ethiopia's Government official said.  

Global logistics giants such as French-based companies CEVA Logistics and Bollore Africa (now Africa Global Logistics) began forming joint ventures with Ethiopian firms in 2019 following an extended period of serving clients in the country through local agents. 

These joint ventures appeared keen to take part in the bid for multimodal operator licenses when the tender was first announced in 2022, with Bollore officially taking part in the first round of bidding. However, the interest appears to have dried up for the second round. 

“We didn’t prohibit foreign companies from competing,” said Abdulber. 

All three bid winners have met the minimum requirements listed out in the multimodal directive prepared by the authorities. These include 350 million birr in paid-up capital and five hectares of land under lease or ownership, of which three hectares are to be used to develop a terminal with a minimum of 3,000 square meters of bonded warehouse space. 

The companies have been granted a six-month window to finalize preparations and begin operations. Failure to meet the time constraint could see administrative measures including the revocation of licenses. 

Elizabeth Getahun being the CEO of Panafric Global and President of the Ethiopian Freight Forwarding and Shipping Agents Association noted the lack of foreign participation in the bidding process. She says, 

“I think the foreign companies made their own business decisions by not taking part in the bid,” ..... “But it’s a big deal for domestic firms to get the licenses.” 

A logistics expert who spoke to the media on condition of anonymity observes the disinterest from foreign firms might have stemmed from an “inevitable high favoritism on the side of the government towards ESLSE.” 

The expert says that security concerns also likely played a role in discouraging foreign interest. 

“No peace means no logistics at all,” said the expert.