Houthi Group's Support for Hamas and Implications on Shipping Routes and Supply Chains

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Houthi Group's Support for Hamas and Implications on Shipping Routes and Supply Chains

The Houthi group has announced its support for Hamas and has been attacking ships potentially heading to Israel, prompting major shipping companies to reroute their vessels to avoid the risk of attacks. This has led to disruptions in supply chains and is expected to significantly affect the transportation of consumer goods. As a result of the attacks, some of the world's largest shipping firms, such as Mediterranean Shipping Company and Maersk, have redirected their vessels to take a longer route around Africa's Cape of Good Hope and up the west side of the continent. This has raised concerns about the potential disruption in supply chains, with consumer goods expected to be the most affected. Chris Rogers, the head of supply chain research at S&P Global Market Intelligence, has noted that the current disruption has occurred "during the off-peak shipping season," but it is inevitable that supply chains will be impacted due to the redirection of ships away from the Red Sea. Moving freight by sea the only option? According to Rogers, transporting goods by rail would involve crossing Russia, which is under economic sanctions due to invading Ukraine. Additionally, shipping by truck from the Gulf to Israel may only offset around 3% of shipping. Both Maersk and Hapag-Lloyd, which have had ships attacked by Houthi rebels, have welcomed the extra measures but are uncertain about when they would go back to using the Red Sea, indicating that there could be disruption for some time.