$1 million in extra costs and weeks of delays. How the Red Sea crisis is upending global trade

Attacks on container ships in the Red Sea have wreaked havoc on one of the world’s most important trade routes, increasing shipping costs and raising inflation fears. Here’s what you need to know.

Attacks on container vessels in the Red Sea have been wreaking havoc on one of the world’s most important trade routes for weeks, and shipping giant Maersk warned Thursday that the disruption could last as long as a year. Iran-backed Houthi militants stepped up their attacks on ships in late November in retaliation for Israel’s war against Hamas. The resulting delays and extra costs for shipping companies have fueled concerns that consumers, still struggling after a prolonged spell of rampant inflation, could be hit with fresh price rises. There has been an “almost wholesale exodus” of larger container ships from the Red Sea and the adjoining Suez Canal, Richard Meade, editor-in-chief of shipping publication Lloyds List, told CNN. Those ships, which ferry everything from trainers to mobile phones from manufacturers in Asia to customers in Europe, have been taking longer routes to avoid the area. That exodus is a big deal: The Suez Canal, which connects the Red Sea to the Mediterranean Sea, accounts for 10-15% of world trade, which includes oil exports, and for 30% of global container shipping volumes. But the overall impact on shipping costs and supply chains is far less severe than at the height of the pandemic, analysts tell CNN. Still, the current crisis has left its mark, prompting Tesla (TSLA) to pause some of its production because of delays in the delivery of car parts to Germany, and Swedish furniture giant Ikea to warn of possible product shortages.