December 20, 2023
See this little canal of water?
Well the United States along with several other countries just sent warships here to protect it. Why? To keep your gas prices down and to stop global supply chains from breaking down like they did during the pandemic.
So here’s what’s happening.
This little canal of water is actually the Suez Canal in Egypt that connects the Mediterranean Sea to the Red Sea. It’s about 120 miles long but it is a major shipping trade route between Europe and Asia and the rest of the world. In fact about 15% of world shipping traffic including roughly 30% of global container trade passes through the Suez Canal every year. I’m talking — oil, grain and goods all pass through the Suez canal every single day on these huge private industry merchant ships.
Well since the war started in Gaza, President Biden sent several US air craft carrier strike groups here to the Mediterranean Sea as a deterrent to keep other countries or groups from getting involved in the war between Israel and Hamas and expanding the war into all these other countries.
Well an Iran-backed militia group called the Houthis don’t like that the United States is there. And they have been attacking these US war ships in the Mediterranean Sea and our service members who are stationed in the region. Now these Houthis have mostly been unsuccessful – but still these attacks have been happening. Well — in the last few weeks – these Houthis – again – backed by Iran have not been seeing the traction they want with the attacks on the Americans
So instead they’ve started launching attacks on these huge private merchant ships moving through the Suez canal. They’re launching missile attacks and using drones to hit these private ships and they’ve even seized these ships on more than a dozen occasions. Well you can imagine private industry wants nothing to do with this, they don’t want to endanger their employees nor do they want to lose the cargo they’re shipping
So instead of going through the short cut which is through the red sea and Suez canal – they are now having to instead go around all the way around the tip of Africa and all the way around here to get to the same port. That adds days and fuel cost to the trip.
Experts say this could add billions of dollars in costs and snarl supply chains like we saw during the pandemic which could spike up inflation. You may remember back in 2021 when a huge container ship got stuck in the Suez Canal for 6 days –economists estimated daily trade worth up to $10 billion came to a halt. And that was because of a traffic jam not because of threats of missile attacks.
Again – we’re talking about private industry we’re not talking about a charity so who do you think will end up picking up these delay costs? You guessed it. The consumer. All of us.
So – the United States along with the UK, Bahrain, France, Italy, Canada, Norway and several other countries came together and announced they had formed a naval security task force to basically patrol the Suez canal and provide protection to these cargo ships to protect them from these Houthi attacks. Some of the countries are also providing intelligence support in the red sea. Well – that may be too little too late becuase several big shipping companies including Maersk said while they appreciate the international security effort — they’re not taking any chances and they’re sending their ships around the tip of Africa instead.
