The Loadstar Leader: What's next for the Houthis, and who is left all at sea?

What difference a summer season makes. Shippers entered June with indications that the costly, and lengthy, transits around the Cape of Good Hope may finally be nearing their end after the Houthis announced a major shift in strategy.

Having spent the better part of the preceding two years targeting any commercial vessel they could get a shot off at in the Red Sea, the Iran-backed militia confirmed to The Loadstar that it would be shifting focus to target Israel’s port of Haifa.

The development marked a high point. Since, the region has only experienced a deterioration in the prospects of carriers returning – beyond CMA CGM, which seems to have some sort of mythical cape around it – as Israel expanded its own theatre of military operations to include Iran.

As last week ended, the situation was that the port of Haifa remained a target, Israeli-owned/operated vessels were targets, vessels headed to Haifa or carrying Israeli munitions were targets, and vessels owned by carriers with ships calling at Haifa were also targets.

Each dilution of the opening message of summer – de-escalation – appears to have come as a direct response to claimed acts of Israeli aggression against an entity allied, and or affiliated, to either the Houthis or to their purported cause: the liberation of Gaza.

Thus, one must ask what the next step will be for the group, following the assassination of its prime minister, Ahmed Ghaleb Nasser al-Rahawi, during an Israeli airstrike against the Yemen capital of Sanaa on Thursday.

One logical conclusion would be that the group would simply revert to the position it adopted in the closing stages of 2023, when it essentially closed the Red Sea to commercial shipping – albeit with exceptions for Chinese carriers… and CMA CGM.

Given the dire state of commercial shipping at the moment, with the threat of excess capacity taking a potentially existential chunk out of income streams only held off by the need to route around Africa, this could prove a win-win for all involved.

CMA CGM retains its unique competitive advantage as the only operator “brave” enough to transit the Houthi-controlled Red Sea; container shipping writ large’s mechanism for stopping a massive rates collapse is kept in place; and the Houthis preserve their $1bn revenue stream.

And those left all at sea? Shippers.