Experts weigh in on Red Sea blockade’s impact on Jordan

(File photo: Jordan News)
AMMAN – Recent tensions in the Red Sea, stemming from the Yemeni-based Houthi movement’s blockade of ships destined for Israeli-occupied territories, have prompted numerous shipping companies to reroute their vessels. This shift avoids the traditional route through the Egyptian Suez Canal in the north, which connects to the Mediterranean Sea. The blockade, a show of solidarity in support of Palestinians amid Israel's war on Gaza, has created cascading effects throughout the region.اضافة اعلان

The rerouting of vessels has led to increased costs and time for cargo deliveries. Additionally, both oil prices and insurance premiums have surged in response to the disruption caused by the altered shipping routes.

Imad Al-Dean Al-Kara, an employee at a shipping company, informed Jordan News, "There is concern about a decline in shipping and an increase in commodity prices because most shipping lines are affiliated with European companies or are in collaboration with the Zionist enemy. Since the Houthi group attacked the Red Sea, shipping prices have tripled. For example, the price of a container from Hong Kong went from $1,400 to $8,000."

He added, “These factors hinder the continuity of shipping operations for us as a Jordanian company, and we are actively seeking alternatives to European shipping lines to ensure reasonable shipping costs and smooth delivery.”

Insurance on goods has increased
In addition to seeking alternatives, Tabarra noted that insurance on goods has increased, sometimes even more than the commercial invoice itself. Emphasizing that this can reflect on the increase of commodity prices, and lead to delays at sea. “This might also push certain traders to monopolize goods or purchase them from alternative regions,” he said. Tabarra predicted that if the blockade persists, the shipping sector will experience an unprecedented increase in costs.

Furthermore, Vice Chairman of the Amman Chamber of Commerce, Jamal Al-Rifai, told Jordan News, "The Houthis have declared their intention to target ships owned by Israel or heading to the Zionist entity. Naturally, the impact of these attacks would be limited to goods coming from India, the Far East, and Africa. However, shipping companies have imposed increases on all goods arriving at the Red Sea, including those passing through the Suez Canal."

Rifai considered these cost increases to be inexplicable and unjustified, speculating that the reason might be an agreement among global shipping companies to raise shipping prices for goods. He said, “In the city of Aqaba, we are experiencing a rise in wages. A month ago, the shipping fees for a single container coming from China were $2,500-$3,000, but now they have increased to $5,000.”

Redirect goods to other ports
With the increased routes, he added there are no available bookings for goods heading from Aqaba, “There are also requests to redirect goods to other ports like Jebel Ali and Dammam, and then transport them to Jordan by land."

He added, “What concerns us in Jordan is, firstly, ensuring the continuity of supply chains. We are not worried about it because we will work to find alternatives and solutions to reduce shipping costs. Secondly, we aim to have reasonable shipping costs so that the increases do not negatively impact the citizens.”

Rifai emphasized that price increases are inevitable because shipping lines have suddenly and directly imposed fees on goods, even on those that arrived in Aqaba before the blockade, citing it as related to war risks. He affirmed that these decisions come from external shipping companies due to the increase in insurance premiums due to the risks of war, considering the increase to be significant.

A decision to prohibit the export and re-export a range of goods
The spokesperson for the Ministry of Industry, Trade, and Supply, Yanal Barmawi, told Jordan News Minister Yusuf Al-Shamali decided last week to prohibit the export and re-export of a range of goods following a recommendation from the Food Security Council. In a statement, he said “This decision is in response to the increased shipping costs arising from tensions in the Red Sea. The objective is to safeguard food stocks, meet local market demands, and uphold price stability in the domestic market.” He stressed the government's decision encompasses essential commodities such as rice, sugar, and vegetable oils, including corn oil, sunflower oil, palm oil, and soybean oil.

Political economist Zayyan Zawaneh told Jordan News “It is crucial to begin by clarifying that navigation in the Red Sea is generally safe, excluding occupation ships and those heading to its ports. However, predictably, the United States seized upon this as a pretext to ally ostensibly to protect navigation in the Red Sea. They deployed warships to both the Arabian Gulf and the Red Sea, escalating risks for everyone and creating fertile ground for new conflict zones…. causing delays in the flow of goods.”

He added “These ‘maritime routes’ also form an integral aspect of the ‘political geography’ of nations, resistant to alteration. Jordan is intricately connected to this dynamic and inevitably affected by it.”

He noted that the government's strategy involves reinforcing a blend of both land and sea trade routes with its counterpart Egypt. Simultaneously, it persists in calling upon the global community and the US to cease hostilities, recognizing it is the most humane and sustainable solution.

In addition, Mazen Irsheid told Jordan News “The Red Sea is a major route for shipping oil, natural gas, and consumer goods. The attacks have compelled major companies like BP [British Petroleum] and Evergreen Line to suspend their operations in the Red Sea. This results in delays and additional costs, as ships must take longer alternative routes, such as around the Cape of Good Hope, adding approximately 10 days to voyages and millions of dollars in costs. And, there is an escalation in shipping costs and delays in the arrival of goods. During the 'Ever Given' crisis, container shipping costs surged from $2,000 to $14,000. This illustrates how security tensions can significantly amplify costs.”

An impact on global trade
The extension of the blockade, he noted is much more than just increased prices or delayed shipping of goods, some companies like Maersk and Hapag-Lloyd, are considering altering their ship routes away from the Red Sea to mitigate risks, “These changes indicate the potential disruption of global supply chains and an impact on global trade.”

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