Consumers face higher prices for goods as Houthis continue attacks in Red Sea

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Huthi military spokesman, Brigadier Yahya Saree, delivers a statement on the recent attacks against two commercial vessels in the Red Sea during a march in solidarity with the people of Gaza in the capital Sanaa on December 15, 2023. Yemen's Huthi rebels struck a cargo ship in the Red Sea on December 15, causing a fire on deck in the latest of a near-daily series of attacks in the commercially vital waterway. The Iran-backed Huthis, who control much of Yemen but are not recognised internationally, say they're targeting shipping to pressure Israel during its two-month-old war with Palestinian Hamas militants in the Gaza Strip. (Photo by MOHAMMED HUWAIS / AFP) (Photo by MOHAMMED HUWAIS/AFP via Getty Images)

The Houthi attacks against commercial vessels in the Red Sea are threatening to disrupt U.S. and global markets with delayed shipping times and increased good prices, The Washington Post reported.

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Due to the Yemen-based Houthis launching several attacks since October 7th against vessels in the Red Sea as part of retaliation efforts against Israel and its allies, commercial vessels are now taking longer routes to reach their destinations, resulting in delays and higher shipping costs, and ultimately increased prices for consumer goods in the U.S. and across the world.

The Daily Caller News Foundation reports “Major shipping companies like COSCO, Maersk and CMA CGM, as well as several fuel tankers, previously utilized major trade routes in the Red Sea that cut through Africa and Asia, according to the Post. The recent spate of Houthi attacks has forced shipping vessels to move down and around South Africa’s Cape of Good Hope.”

This new route adds thousands of miles and potentially weeks of time to a vessel’s trip, according to the Post.

“It’s about an 8 percent longer journey, which is going to drive prices up quite a bit for ocean freight – that’s a material impact on prices for the goods themselves,” Ryan Petersen, CEO of Flexport, told the Post. Petersen noted that the higher costs associated with shipping these goods will affect the prices of “most of the stuff that you see in stores.”

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Delayed shipping times also mean that some of the goods these vessels are carrying will no longer be in season when they finally arrive at their destination, making them less profitable to retailers and wholesalers, according to the Post.

“You can’t sell Valentine’s Day cards on St. Patrick’s Day,” George Kochanowski, CEO of shipping container company Staxxon, told the Post.

 

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U.S. Department of Defense Secretary Lloyd Austin announced in December that an international task force had been formed to combat the Houthi’s aggression in the Red Sea. On Friday, the United States Treasury Department announced new sanctions will be imposed on the Islamic-Republic backed Houthis.

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