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Japanese Shipping Giant: Global Supply Chain Disruptions Could Last Up to a Year

  • Houthi rebels continue to target commercial vessels in the Red Sea, raising security concerns along critical maritime routes.
  • Mitsui OSK Lines, with around 800 vessels, has stopped all transits through the Red Sea, highlighting the severity of the situation.
  • Warnings from major banks and shipping companies emphasize the potential for widespread impact on global supply chains if Middle East tensions escalate further.

President Biden's Operation Prosperity Guardian to shield commercial vessels in the Red Sea, along with US and UK bombing raids across the Middle East, have yet to stop Iran-backed Houthi rebel attacks around the Bab al-Mandab Strait. 

On Tuesday morning, Houthi rebels fired "projectiles" at two commercial vessels, striking one, highlighting the ongoing risks of sailing through the Red Sea. 

Japanese shipping giant Mitsui OSK Lines Ltd. issued a warning today that shipping disruptions might extend for up to a year, indicating that expectations for short-term disruptions are quickly fading. 

"It's a historic event," President Takeshi Hashimoto said in an interview, quoted by Bloomberg

Hashimoto said, "The situation will continue at least for the coming two or three months. And as a worst-case scenario, six months or one year."

He pointed out that there's enough shipping capacity to weather current supply chain disruptions. Still, he warned that if the global economy suddenly expanded, it could spark a shortage of shipping capacity. 

Mitsui OSK Lines has about 800 vessels in its fleet. It said last month that all transits through the Red Sea were halted due to Houthi drone and missile attacks on commercial vessels.

Two weeks ago, MUFG Bank warned clients that "higher friction geopolitics" jeopardizes maritime chokepoints.

Last week, Deutsche Bank Research warned clients: "Red alert 101: Tension in the global supply chain." 

Here's the problem: If regional instability risks continue to spread across the Middle East, other critical chokepoints could be affected and accelerate snarled global supply chains.  

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By Zerohedge.com

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