Four of the five largest shipping firms in the world will veer from the Red Sea route due to attacks. This decision has put oil and seaborne wheat shipments on the line.

Yemeni Houthis have intensified attacks on ships they link to Israel, a country also facing war-fueled trade disruption. The Iran-supported rebels claim to have targeted three vessels in December, one of them a Liberian flagship. The attacks have pressured BP, CMA CGM and Maersk to stay off the Red Sea route.

This will impact 10% of global trade by 17000 vessels that pass through the Suez Canal yearly.

The biggest losers of this armed threat are oil and gas.  Red Sea shipments for the two accounted for 12% and 8% respectively of global shipments between January and June, 2023. 

Wheat Shipments Blank

Wheat faces the next big challenge as most West Asia nations rely on Red Sea-bound imports of the grain.

Indeed, global seaborne wheat trade in the second half of November saw a spike due to demand from West Asia. The region received 0.8 million tonnes of wheat between mid- and end-November 2023.  Recipients included Turkey, Saudi Arabia, Syria, Yemen and Jordan.

Global seaborne wheat supplies for the November 16- 30 fortnight came mainly from Russia and the EU, at 1.1 million MT. Canada and Australia shipped 0.9 million tonnes and 0.6 million tonnes, respectively. 

Security concerns also hindered Ukraine’s wheat shipments totaling 0.9 million tonnes from reaching the Mediterranean region. The destinations for the foiled mid-November to early-December 2023 shipments were Israel, Egypt, Tunisia, Italy and Spain. One of the long-range shipments was bound for China.

Yemen’s Wheat Imports

Among the countries that rely on Red Sea for their seaborne wheat is Yemen. The country imported 1 million tonnes of wheat between July and November, 2023. Already 18% down from the same period in 2022, wheat imports fell further by 30% in early December 2023. 

Wheat imports to Yemen in 2022 accounted for 57% of its total food imports.

Alongside India as the closest source of wheat, the government of Yemen also seeks cheap grain from Russia and Ukraine. The two former Soviet nations supplied 4% of the country’s wheat imports in 2021. 

Yemen’s wheat purchasing decisions go by pricing comparisons. India, for instance, received high orders in 2022 for it was offering the cheapest wheat rates at $421 per tonne. Comparatively, Russia’s rate was $423 per tonne while that from the U.S’. wheat shippers was $447 per tonne. 

Ultimately, as ships circumnavigate the Cape of Good Hope, wheat shipping rates will likely go up. This will force Yemen and the rest of West Asia to look for trade solutions.