In the age of discovery, between the 15th and 17th centuries, lookouts climbed the masts of ships to spot danger. Five centuries later, the men who warn of navigational mishaps work in large port buildings and are experts in logistics and strategy. In the 15th century, news took months to reach its recipients. Today they are transmitted almost instantaneously.
The Yemeni Houthis began interfering with maritime traffic in the Red Sea days after October 7 and the Hamas attack. In November, large container shipping companies assessed the risk of continuing to navigate in that area. In December, some changed their route towards the Cape of Good Hope, in the south of the African continent. Today, companies like Maersk, the number two in the sector, describe that decision as final.
That the control of critical points in global maritime traffic such as Bab el-Mandeb (the strait that separates the coasts of Yemen and Djibouti) be in the hands of countries that orbit, to a greater or lesser extent, around China, Russia and their allies It is a drama for Western economies.
Large supply chains were created in the 80s and 90s by multinationals thanks to the increase in computing capacity, which allowed real-time control of the activity of subsidiaries and suppliers in distant countries. The Covid pandemic and subsequent supply disruptions showed how efficient and integrated those chains were and how essential they were. Today, the West risks losing control of this nervous system of the world economy.
The immediate effect of diverting traffic to the Cape of Good Hope is seven more days of travel and an increase that may more than double the price of transporting a 40-foot container between Asia and the Western Mediterranean. For Western economies, this could easily be the return of inflation (now that we seemed to have it under control). For economies that were confident that 2024 was going to be a soft landing year, the second part of the year could be somewhat busier than expected.
