As a result of the ongoing Houthi actions in the Red Sea, the maritime industry is addressing the consequences of frequent attacks in a changed risk landscape, according to Neil Roberts, head of marine and aviation, Lloyd’s Market Association, and chair of the International Union of Marine Insurance (IUMI) policy forum.“Container shippers were quickly faced by rapidly increased costs, with box hire adding perhaps $10 million to a 15 000-TEU charter in early January, and even more since. That makes any additional insurance premiums look very insignificant and explains why box ships diverted early,” he said.“There is undoubtedly a risk of collateral damage to set alongside the deliberate targeting, which may or may not be entirely accurate. More than 30 vessels have actually been hit, but what remains unclear is why the missiles have been relatively ineffective in terms of explosive damage.”According to Roberts, the crews were already entitled to higher wages for transits, but the ITF has taken the further precaution of designating the Red Sea an area where, with seven days’ notice, crew have the option of refusing passage. This, he said, highlighted the level and perception of danger, both feared and actual.He said insurance losses to date remained within underwriting tolerance.According to Roberts, nearly 50% of shipping is still choosing the Red Sea route – and for those vessels, the London market continues to offer cover, tailored for the specifics of the individual voyages. Naturally, enhanced risk attracts an enhanced premium but the threat is clear to all.Other experts Freight News spoke to echoed Roberts’ sentiments, noting that for many urgent cargo shipments, rerouting via the Cape was not a viable option. Despite the additional premiums associated with high-risk routes, cargo owners are willing to bear the cost to ensure timely delivery and minimise potential disruptions to their supply chains.
