Increased costs and delivery times for shipments are causing significant issues for people relocating to the UAE.
Attacks by Houthi rebels on shipping vessels in one of the world’s busiest maritime trade routes have forced operators to divert supplies via southern Africa and the Cape of Good Hope resulting in much longer transit times.
Drone attacks and several tanker invasions from smaller vessels have caused widespread chaos and a forceful response from coalition naval forces patrolling the region.
“The situation is causing some significant challenges, especially for people and businesses moving to and from the UAE,” said Craig Reilly, chief executive of the Dasa Group, an international moving company in Dubai.
“We're seeing increased costs and longer wait times for transporting household goods.”
Mr Reilly said the delays were primarily due to the heightened shipping costs and disruptions in the supply chains, which are passed on to consumers and businesses.
“This translates to higher overall costs and reduced efficiency in relocating goods to and from the region,” he said.
“The escalating conflict is a serious concern for the global economy.”
Suez Canal tanker transits have fallen by 14 per cent since the first attacks in late November.
chief executive of Tristar Eships
Freight insurance to move household goods is unlikely to cover any costs incurred from delays, due to the force majeure concept for which no party can be held accountable, similar to extreme weather patterns.
People relocating are also expected to face additional significant port and freight costs, even if their household items are already at sea.
“We've informed our clients that anything leaving here now, or anything else, will incur a surcharge that goes straight to the port,” said Mr Reilly.
As for the UK, shipping costs could be increased by $400, or $1,500 depending on where it is going to, he added.
“The [time] it takes for us to get containers to turn around and the supply of containers will dictate the cost going forward.”
Doubling up on household items
Kuba, who did not want to give his full name, is a lawyer who recently relocated to Dubai from Poland with his wife.
The couple are awaiting arrival of their household items to move into a villa in Mira Oasis.
“We scheduled for everything to arrive by the end of January, about 30 to 40 days of transit,” he said.
“They packed all of our stuff on December 18 and then a few days later, we got a message saying unfortunately, due to the situation at sea, it would be delayed, with the arrival likely to be around February 22.”
The couple have been forced to pay for furniture in Dubai for their new house, and face having furniture they no longer need when their shipment finally arrives.
“Unfortunately, it has since been delayed by an additional five days and will not leave Poland until January 24,” said Kuba.
“I hope that it will be in Dubai by the end of February, but you never know.”
Matt Stanley, a senior commodity broker at Starfuels in Dubai, said importers will be planning ahead of Ramadan to ensure vital goods arrive on time for one of the busiest times of the year.
“Usually, about this time of year, Gulf nations are importing a lot of wheat via the Red Sea, knowing Ramadan is coming up,” he said.
“That usually comes from Ukraine and goes through the Black Sea via the Suez, but there's enough time to plan for the eventuality that it has to go via the Cape of Good Hope instead.”
Major shipping companies, including Europe-based MSC, Maersk, CMA, CGM, Hapag-Lloyd and Asia-based Cosco Shipping, HMM and Evergreen Line, have suspended shipping operations through the Red Sea.
“The big container lines are so huge and cumbersome that they have no choice but to reroute,” said Mr Stanley.
“If they have to pay a premium to get their goods into the containers they will, whether they pass that down to the end user will be down to each individual retailer.
“Supermarkets with a high market penetration will probably absorb the cost, but if you're a sole trader, you're going to pass that on.
“Oil and petrol is different because it's such a fluid situation. I think fuel prices will be the first hit to the end user.”
There is a growing concern that if the Arabian Sea, positioned south of Saudi Arabia and west of India, is also affected, it could have far-reaching implications.
Critical oil route
The area is crucial for a significant portion of the world's oil supply, with any disruption having a global impact.
The Houthis, who control much of Yemen, are taking aim at vessels to put pressure Israel over its devastating war with Palestinian Hamas militants in Gaza.
Tim Coffin, chief executive of Tristar Eships, a Dubai-based shipping service that owns and operates a mixed fleet of chemical, oil and gas tankers, said the industry was facing significant challenges.
“The Houthis belligerence in the southern Red Sea is interestingly coinciding with an uptick in piracy incidents from Somalia,” he said.
“The whole region of north-east Africa and [the] southern Red Sea is now a high-risk area.
“Recently, in the last week or 10 days or so, we've seen seaborne drones and a manned attack by skiffs and small boats.”
The US-led Operation Prosperity Guardian was launched in December to ensure the safety of maritime traffic in the Red Sea, Bab Al Mandeb and the Gulf of Aden – one of the major choke points for global shipping.
“The general feeling is that everybody's on alert,” said Mr Coffin, whose company manages a mixed fleet of chemical, oil and gas tankers, as well as bulk carriers crucial to global trade.
“The difficulty now is how do you provide sufficient confidence that you can send a ship through and be sure it will not get shot at?”
Mr Coffin said that ships that carry perishable goods, which are container ships primarily, were the most affected, with participants from every sector of the industry avoiding the Red Sea.
“We saw this in 2021 when the Ever Given container ship blocked the Suez Canal,” he said.
“The disruption we're seeing now is even greater.”
