Indian Navy picks up crew after ship hit off Yemen coast

[January 18, 2024]  By Krishn Kaushik, Idrees Ali and Phil Stewart

NEW DELHI/WASHINGTON (Reuters) -The Indian Navy said on Thursday it had rescued the crew of a U.S.-owned vessel in the Gulf of Aden after an attack by Yemen's Houthi movement as tensions in the region's sea lanes disrupted global trade.

Following the attack on the U.S. Genco Picardy late on Wednesday, the U.S. military said its forces had conducted strikes on 14 Houthi missiles that "presented an imminent threat to merchant vessels and U.S. Navy ships in the region".

Attacks by the Iran-allied Houthi militia on ships in and around the Red Sea since November have slowed trade between Asia and Europe and alarmed major powers in an escalation of the war between Israel and Palestinian Hamas militants in Gaza.

The Houthis say they are acting in solidarity with Palestinians and have threatened to target U.S. ships in response to American and British strikes on the group's positions.

The strategy pursued by U.S. President Joe Biden - a blend of limited military strikes and sanctions - appears aimed at preventing a wider Middle East conflict even as Washington seeks to punish the Houthis, security and military experts say.

But it is unclear whether it will accomplish Biden's main goal: halting attacks by militants that are causing supply bottlenecks and raising fears that inflation could reignite.

India had earlier diverted a warship deployed in the region to rescue the 22 crew on board the Genco Picardy, including nine Indians. The crew were all safe and a fire on board the vessel had been extinguished.

The Houthi movement said its missiles had made a "direct hit" on the bulk carrier. Shipping operator Genco confirmed the attack, and said its vessel was hit by a projectile while it was passing through the Gulf of Aden with a cargo of phosphate rock.

TRADE FLOWS DISRUPTED

The attacks target a route that accounts for about 15% of the world's shipping traffic and acts as a vital conduit between Europe and Asia.

Container ships cross the Gulf of Suez towards the Red Sea before entering the Suez Canal, near Ismailia port city, northeast of Cairo, Egypt, Egypt October 31, 2018. Picture taken October 31, 2018. REUTERS/Amr Abdallah Dalsh

The alternative shipping route around South Africa's Cape of Good Hope can add 10-14 days to a journey compared to passage via the Red Sea and the Suez Canal.

The crisis was rippling through the business world and reviving concerns about stretched supply chains that emerged when activity picked up after the COVID-19 pandemic.

War-hit Ukraine said the situation had led to a slowdown in its agricultural exports this month. Pepco Group, the owner of the Poundland group of discount retail stores, warned that its inventory levels could be impacted.

The re-routing of a growing number of vessels is altering refuelling patterns and boosting demand for bunker fuel used by ships at far-flung ports, from Mauritius to South Africa to the Canary Islands.

Denmark's Maersk and other large shipping lines have instructed hundreds of commercial vessels to stay clear of the Red Sea, sending them on the longer route around Africa or pausing until the safety of vessels can be assured.

The attacks, as well as weather-related closures and stoppages in Europe, were causing congestion at several container terminals, Maersk told its customers on Thursday.

Italian ports are concerned that they are being bypassed as ships steer away from the main Mediterranean route.

Freight rates have more than doubled since early December, according to maritime consultancy Drewry's world container index, while insurance sources say war risk premiums for shipments through the Red Sea are also rising.

(Additional reporting by Jonathan Landay, Shivam Patel, Idrees Ali, Simon Lewis, Pavel Polityuk, James Davey, Dan Williams, Terje Solsvik, Jeslyn Lerh, Wendell Roelf and Robert Harvey Writing by Keith Weir; Editing by Catherine Evans and Emelia Sithole-Matarise)

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