Recent assaults by militant Houthi groups on ships in the Red Sea have caused the largest international trade diversion in decades. Over 500 container ships carrying anything from toys to clothing and auto parts, must add up to two weeks to their travel routes by diverting around Africa. That is around 25% of all container shipping fleets worldwide.
These diversions are expected to last several months as conflict rises in the region. European Central Bank president Christine Lagarde says this bottleneck is a key risk factor and is being closely monitored.
Shipping costs have risen significantly for traders across the globe, from Asia and Europe to North America. This comes after Iran-backed Houthi militants assaulted ships in the Red Sea in retaliation for the Israel attacks on Hamas in the Gaza Strip.