The attacks are forcing shipping companies to take alternative, longer routes to avoid the Red Sea, leading to greater revenue and profits.
By Jack Elbaum, The Algemeiner
A major Israeli shipping company is experiencing a surge in profits for a surprising reason: Houthi attacks on ships in the Red Sea.
ZIM Integrated Shipping Services, which has been traded on the New York Stock Exchange since 2021, achieved a 48 percent year-over-year revenue increase in the second quarter of this year to $1.93 billion.
And it’s not just revenue that has increased. Its net income rose to $373 million and its carry volume has risen 11 percent.
This all occurred amid rising tensions in the Middle East that began after the Palestinian terrorist group Hamas attacked Israel on Oct. 7, killing 1,200 people and taking another 251 hostage.
Yemen’s Iran-backed Houthi militia, a US-designated terrorist organization, began disrupting global trade with its attacks on shipping in the busy Red Sea corridor after Hamas’s onslaught, arguing its aggression was a show of support for Palestinians in Gaza.
The Houthi rebels — whose slogan is “death to America, death to Israel, curse the Jews, and victory to Islam” — have controlled a significant portion of Yemen’s land along the Red Sea since 2014, when it captured it in the midst of the country’s civil war.
The Iran-backed movement has said it will target all ships heading to Israeli ports, even if they do not pass through the Red Sea, and claimed responsibility for attempted drone and missile strikes targeting Israel. Since Hamas’s massacre across southern Israel on Oct. 7, which launched the ongoing war in Gaza, Houthi terrorists in Yemen have routinely launched ballistic missiles towards Israel’s southern city of Eilat. In July, they hit the center of Tel Aviv with a long-range Iranian-made drone.
These attacks primarily in the Red Sea, a key trade route, disrupted global shipping, raising the cost of shipping and insurance and having a major economic impact. Shipping firms have been forced in many cases to re-route to longer and more expensive journeys around southern Africa to avoid passing near Yemen.
However, ZIM’s increased revenue and profit appeared to have come because of these attacks, not in spite of them.
It was not just ZIM that experienced rising profits. According to Middle East Eye, “shares of Maersk, the Danish shipping giant operating more than 700 vessels, are up about 20 percent in the last month, while German company Hapag-Lloy — the world’s fifth-largest container shipping group — is up 17 percent.”
The reason they are making more revenue is ironically that they are taking alternative, longer routes, in order to avoid the Red Sea. The issue is that these alternative routes require additional fuel — which cost extra money. These additional costs are passed onto consumers, resulting in greater revenue.
However, the costs passed onto consumers are usually greater than the additional costs that the companies bear due to the longer routes. As a result, they are not just making extra revenue, but extra profit as well.
Observers have noted that these higher prices — which go beyond just the additional prices of fuel, for example — may be justified by pointing out that shipping has become increasingly risky, and so consumers ought to pay higher prices when companies are taking on greater risk.
Since the attacks began, the Houthis have damaged at least 30 ships. At least two cargo ships — one UK-owned and one Greek-owned — have been sunk.
Iran itself has also attacked ships. In April, Iran’s Islamic Revolutionary Guard Corps (IRGC) seized what it claimed to be an “Israeli-linked” ship near the Strait of Hormuz and, in November, Iran attacked an Israeli ship with drones in the Indian Ocean, according to the US.
As for the Houthis, they have threatened and in some cases actually attacked US and British ships, leading the two Western allies to launch retaliatory strikes against Houthi targets in Yemen.