How mounting attacks on Red Sea ships may hit global trade, including Canada

Two of the world's largest shipping companies said Friday they were pausing operations in the critical route, which could have a domino effect on trade flows worldwide.

A mounting number of attacks by Yemen’s Houthi rebels on ships in the Red Sea amid the Israel-Hamas conflict is raising concerns about the impact on global trade — including in Canada.

Two of the world’s largest shipping companies, Maersk and Hapag-Lloyd, said Friday they were pausing operations in the critical trade route. That could lead to a domino effect on goods passing through the Red Sea, where about 10 per cent of the world’s trade flows through.

Although Canada doesn’t directly operate any cargo vessels in the Red Sea, the domestic shipping industry has direct relationships with those companies and others that bring goods to and from world markets.

“Any major disruption to trade flows in that area could have a downstream effect on the movement on goods to and from Canada in the future,” said Chris Hall, president and CEO of the Shipping Federation of Canada.

Since Israel began its military response to Hamas’ brutal attacks on Oct. 7, the Iranian-backed Houthi rebels in Yemen have escalated their attacks on commercial and military vessels in the Red Sea. The attacks, involving drones and ballistic missiles, were reportedly targeting ships heading to Israel in an effort to stop its assaults on the Gaza Strip.

In one instance last month, the Houthis used a helicopter to seize an Israeli-linked cargo vessel, the Galaxy Leader, and its crew, an operation that was captured on video.

But in the past few days, the attacks have been on cargo ships with no apparent connection to Israel. The most recent saw a ballistic missile strike the MSC Palatium III, a Liberian-flagged container ship that later caught fire. It was not immediately clear if anyone onboard was hurt.

That strike came hours after another one on the Hapag-Lloyd-owned Al Jasrah vessel, which is also flagged to Liberia and was heading from Egypt to Singapore.