5 July (Lloyd's List) - HOUTHI attacks may have re-routed 60% of vessel traffic around the Cape of Good Hope, disrupting global trade in the process, but the threat posed by missiles and uncrewed surface vessels sits at the lower end of the risk spectrum for shipping.

The naval response to Houthi attacks has reached a point of stalemate where security for shipping is unlikely to improve. But it could get worse, according to security experts addressing the latest Lloyd’s List Geopolitical Risk webinar.

Mines, or even the threat of mines, pose a more significant security risk to seaborne trade. The prospect of state, or non-state actors escalating their current trade disruption efforts to a full scale blockade of any of the major maritime trade choke points is entirely feasible, according to Mike Plunkett, senior naval platforms analyst at Janes.

“The Houthis have never actually really tried to close the Bab el Mandeb. They are interfering with traffic, but they are not stopping it. As with pretty much any of the major choke points in the world, mines would force a very complicated, expensive and slow process to reopen it to trade,” said Plunkett.

Given the current fragmented naval approach to securing trade and stretched resources across key naval fleets, mines in any of the key choke points for seaborne trade would “stretch the available naval capacity to deal with it beyond breaking point,” according to Plunkett.

“Mine countermeasures is not something we have a great capacity to deal with and [naval capacity] is already stretched further than it should be right now,” he continued.

Transits through the Bab el Mandeb are down 60% since the Houthi attacks first started — a figure that has remained largely stable for over three months despite successive waves of attacks, according to Lloyd’s List Intelligence data. However, with Houthi tactics evolving the attacks are becoming more lethal, and more difficult to defend against — a trend that has seen the initial signs of more ships diverting.

Transits were down 11% last week following recent fatal attacks, Lloyd’s List Intelligence maritime risk analyst Bridget Diakun told the webinar. While it was too early to tell if that represented a sustained trend, Diakun explained that shipping companies were constantly revising risk assessments based on a continuously evolving threat.

“We’re on the fourth iteration of the Houthi’s strategy now,” said Diakun. “They are deploying new weapons strategies and attempting attacks well outside of their traditional zone of aggression.”

The recent deployment of sea drones has increased the threat level for shipping, as evidenced by the sinking of the kamsarmax bulker Tutor (IMO: 9942627). While the average age of ships passing through the Bab el Mandeb has increased 13 years in 2023 to nearly 17 year in 2024, Tutor was an expensive anomaly that has focussed minds on the increasing asset prices of ships passing through the danger zone.

Tutor was only delivered in 2022 at a cost of $27.2m and, as brokers BRS pointed out this week, the asset replacement cost of this vessel via a five-year-old unit with standard specifications would cost an additional $10m on the original price.

Outside of the immediate risk in the Red Sea, the potential for disruption of the Taiwan Strait was seen by the security experts on the webinar as the next potential risk for maritime trade.

Plunkett warned that while any escalation of existing tensions would be “extremely messy”, the likelihood of a direct Chinese invasion of Taiwan remained unlikely.

“I think the more likely scenario would be a blockade, with the calculus that America and its allies do not risk an all-out war with China to save Taiwan,” he said.

Looking beyond the immediate physical security threats to maritime trade, however, China featured heavily on the list of potential geopolitical risk factors for shipping.

According to Nissa Felton, senior manager, geo-economic influence & threat intelligence at Janes, China’s evolving trading relationships with US and Russia should be high on the list of potential risks for politicians and shipping’s executives. She also warned that China’s dominant ownership position in shipping infrastructure is an issue that will be the subject of increasingly forensic state-level risk analysis.

The increasingly blurred lines between Chinese commercial and state-controlled entities and across the shipping and logistics space is increasingly being flagged as a major concern by companies, particularly in relation to the data access and intelligence gathering abilities it affords the Chinese state, explained Felton.

“Chinese companies have access to a broad range of proprietary data about maritime ownership, cargo, trade routes, resupply requirements, personnel, etc, that could be useful in defence intelligence purposes,” said Felton.

The repercussions of this would be that it could give China greater visibility into the country’s logistics systems and be used strategically to target economic coercion efforts”.

Felton also raised concerns regarding China’s systematic investment in key maritime infrastructure and the shifting nature of China’s trading relationships in the wake of western sanctions.

“Following Russia’s invasion of Ukraine we’ve seen China take advantage of the vacuum left by western companies in Russia,” said Felton.

“We’ve seen an increase in cross-border logistics between the two countries. We’ve seen new Arctic activities taking place along the Northern Sea route and we’ve also seen combined activities in central Asia — a region of shared interest for those two countries”.