By P.K.Balachandran/Daily News
Colombo, January 10: Last Wednesday, Sri Lankan President Ranil Wickremesinghe announced that a Lankan naval ship will be deployed in the Red Sea as part of an international force to protect world shipping against attacks by the Yemen-based Houthi rebels.
The Iran-backed Shia militant group says that its attacks on Red Sea shipping are in support of the hapless Palestinians in Gaza who are being bombed day and night by the Israelis pulverising buildings and killing civilians in their thousands.
But no matter what the cause, the Houthis should not be allowed to continue with their depredations with impunity. They are hitting the entire world with their attacks causing disruptions all over the world. Sooner or later, these will affect Sri Lanka too.
Therefore, the Sri Lankan President’s announcement about sending a warship to the Red Sea did not come a day too soon. Goods from and to Sri Lanka pass through this choke point.
In fact, the entire world is concerned as 15% of world trade, 12% of oil trade; and 8% of CNG trade pass through the Red Sea. 8.8 million barrels of oil and 4.1 million cubic feet of LNG traverse it per day.
India has already sent naval vessels to join a 20-country coalition in the Red Sea put together by the US. It has deployed Guided Missile Destroyers INS Mormugao, INS Kochi and INS Kolkata, and also long-range maritime reconnaissance P8I aircraft after the merchant vessel MV Chem Pluto, with 21 Indian crew members, was struck by a Houthi drone about 217 nautical miles from Porbandar in Gujarat.
As a country heavily dependent on import and export, Sri Lanka has rightly decided to follow India’s example. A Sri Lankan daily quoted the naval spokesman as saying that the navy is studying the logistics of such deployment and a final decision will be taken after the study.
“We require a robust weapon outfit for this kind of a deployment. It is crucial to analyse the threats in the Red Sea area. To enhance our vessel’s security, an air defence system is imperative. Identifying specific patrol zones, securing fuel supplies, and establishing collaborations with foreign navies are essential components before deploying a ship,” the spokesman said.
The daily quoted the President as saying that if Sri Lanka were to deploy a naval vessel in the Red Sea it would cost LKR 250 million every fortnight. This is indeed costly in the backdrop of the current parlous state of the Sri Lankan economy. But a world trade dependent Sri Lanka cannot not turn a blind eye to the depredations of a terrorist group.
Freight companies, including MSC, Hapag-Lloyd, CMA CGM Group and Maersk have pulled out of the Red Sea. Their vessels now go around the Cape of Good Hope, which means traveling an extra 4,000 miles.
An analysis provided by Flexport, a logistics technology company, showed that as of Thursday, 389 container vessels, accounting for over a fifth of global container capacity, have already diverted from the Suez Canal or are in the process of doing so.
This will mean higher costs for everybody, all along the line.
And Sri Lanka will also be very highly impacted. Nearly 60% of its exports are to the EU and the US (33% to the EU and 25% to the US) and these pass through the Red Sea.
In 2022, Sri Lanka exported goods to the EU to the tune of US$ 3.31 billion and imported to the tune of US$ 1.06 billion. The total export value from Sri Lanka to the US was US$ 3.3 billion in 2022 and total import from US was US$ 393.72 million.
Sri Lanka has been having a trade surplus with the US and EU. But this favourable trade situation may change for the worse if the Houthis are allowed to get away with the rape of shipping at a choke point like the Red Sea.
“I fully endorse the President’s decision to send a naval ship to the Red Sea,” said Rohan Maskarola, Founder and CEO of Colombo Shippers’ Academy. “We cannot allow terrorism to disrupt world trade. Ideological proclivities should not stand in the way of world trade on which the livelihood of millions depends,” he added. In other words, sympathy for the Palestinian cause should not lead to condoning the actions of a rogue rebel outfit.
Maskarola noted that Sri Lanka is the chairman of the Indian Ocean Rim Association from 2023 to 2025 and said that it is its bounden duty to take part in the defence of the member countries’ interests.
Being a shipping expert, Maskarola said that if the current disruptions continue, port calls in Colombo and elsewhere in the word will lessen. A ship will take 21 extra days to reach Colombo as it will have to go round the Cape of Good Hope in Africa, he said. This could create shortages in the market and lead to a hike in prices. It will also mean that Sri Lankan industries will be hit by a shortage of intermediate goods, he added.
Maskarola further said that there could be a shortage of empty containers as many containers might be stuck elsewhere because of the longer voyages. According to him 1.7 million containers may be stuck in ships.
Reuters reported that London’s marine insurance market has deemed Red Sea passage as “high risk” and added to premiums ships pay.
So far, the problems in the Red Sea have not disrupted global supply chains to the same extent that the COVID-19 pandemic did. But the world is heading in that direction. The worrying part is that Houthi attacks have continued even after a US-led international force was assembled in the Red Sea.
The latest report on the situation in the Red Sea is that some of the leading shipping companies have entered into deal with the Houthis to get exemption from attacks. This is nothing but criminal activity and is tantamount to paying ransom, commented Maskarola.
But the saving grace is that oil tankers have been little affected and are continuing to use the Red Sea, as the Houthis appear to have shown little interest in them. By contrast, the number of specialized car-carrying ships using the Red Sea more than halved, one report said. The first vessel attacked by Houthi gunmen in recent weeks was a car carrier, the Galaxy Leader, which was hijacked on November 19, last year while returning to Asia for another load of several thousand cars. The 25-member crew, mainly Filipinos, was also kidnapped and still does not seem to have been released.
The Red Sea disruption comes at a time when the Panama Canal, which has low water levels caused by drought, has slashed the number of vessels that can pass through. That had forced many ships to choose a longer route to the United States via the Suez Canal.
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