"Chinese Navy Escorts"... Chinese Shipping Companies Exploit Gaps in Red Sea Logistics Crisis

On the 25th (local time), major foreign media reported that Chinese shipping companies are filling the Red Sea route, from which global major shipping companies have withdrawn due to attacks by Yemen's pro-Iran Houthi rebel forces.

The Houthi rebels announced in November last year that they would attack Israeli-related vessels passing through the Red Sea to support Hamas, the armed faction in the war between Israel and Palestine. However, they also attacked vessels unrelated to Israel, causing a sharp decline in Red Sea cargo volume.

Norwegian-flagged oil tanker attacked by Houthi rebels in the Red Sea
[Image source=Yonhap News]

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The Red Sea is a key route connecting Europe and Asia. About 15% of global maritime transport passes through the Red Sea. According to shipping service company Clarksons, container ships arriving near the Red Sea in mid-January decreased by 90% compared to early December. According to the maritime data platform MarineTraffic, about 150 vessels passed through the Suez Canal near the Red Sea in the first two weeks of January this year, a 62.5% decrease compared to the same period last year.

Although the Houthi rebels indiscriminately attack vessels passing through the Red Sea, they have stated that they will not attack ships from China and Russia, Iran's allies.

Chi Chen Xian, Asia-Pacific Editor and China expert at maritime data company Lloyd's List Intelligence, said, "The reason Chinese shipping companies are coming to the Red Sea is to take advantage of the fact that they are less vulnerable to Houthi rebel attacks," adding, "Because there is a difference between supply and demand, they can gain commercial benefits."

Transfer Shipping, a shipping company headquartered in Qingdao, China, initially operated only one vessel on the Middle East route but added another vessel at the end of December. China United Lines, headquartered in Hainan, China, recently announced the launch of the "Red Sea Express" service connecting Jeddah, Saudi Arabia, and Chinese ports.

Simon Henry, Senior Manager of Container Research at Drewry Shipping Consultants, said, "This is opportunistic but may attract the interest of some shippers who want to avoid risks."

Foreign media also reported that some Chinese shipping companies use the fact that the Houthi rebels have decided not to attack China as a marketing element. Sea Legend, located in Qingdao, China, introduces on its website that its vessels sail through the Red Sea under the Chinese flag and are escorted by the Chinese navy. Sea Legend was previously not well known but recently deployed seven vessels for transportation services connecting Turkey and China through the Red Sea. Some company vessels are also marked as operated by Chinese personnel or have all-Chinese crews according to satellite identification data.

However, experts believe that Chinese shipping companies targeting niche markets will find it difficult to maintain a long-term advantage. Senior Manager Henry said, "Once the geopolitical conflict in the Red Sea ends, new shipping companies are expected to quickly disappear from the Red Sea."

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