Author of How to Prep When You’re Broke and Bloom Where You’re Planted online course
Last weekend was an eventful one in the Red Sea. Houthi rebel groups have been mercilessly attacking commercial vessels using the passage with drones, and now they’ve upped their game by directly attacking a Maersk cargo ship with missiles and attempting to board, despite the Pentagon rolling out “Operation Prosperity Guardian.”
This is a conflict that could directly affect us by increasing consumer prices for fuel and goods. Let me explain.
What happened to the Maersk ship?
The Maersk Hangzhou was sailing through the normal route on the Red Sea when on Dec. 30, they were attacked by multiple Houthi missiles and hit by one. American naval ships, the USS Laboon and the USS Gravely, responded to distress calls. Gravely intercepted two missiles meant for the ship.
The following day, the situation grew more dire when the Houthi group got bolder. A squadron of four armed boats came within 20 yards of the Maersk ship and attempted to board. They were held off by on-ship security contractors. This time, helicopters from the USS Dwight D. Eisenhower and the USS Gravely responded to the distress call and were engaged by the Houthi. The helicopters returned fire and downed three of the four attacking ships. Ten Houthi crew members died in the attack, and the fourth ship escaped.
Maersk has paused operations in the Red Sea for 48 hours and will decide today whether or not they’ll resume use of that route. Other shipping companies, Hapag-Lloyd, MSC Mediterranean Shipping Company, and Evergreen, have already rerouted their cargo around Africa. BP and Euronav have also suspended passage through the Red Sea.
Now Iran is getting involved.
A spokesperson for the Houthi group has warned of “consequences and repercussions” due to the “aggression” of the US. ZeroHedge reports:
Houthi military spokesman Yahya Sarea confirmed on the Yemeni TV channel Al-Masirah that US forces killed ten of its fighters.
“US enemy forces attacked three boats belonging to the Yemeni Naval Forces, which led to the martyrdom and the loss of ten people from the Naval Forces,” Sarea said.
The spokesman said its fighters were “performing their humanitarian and moral duty” to deter Israel-related commercial vessels from transiting the Red Sea “in solidarity and support for the Palestinian people.”
Subsequently, Iran has dispatched the Alborz destroyer to the Red Sea to provide support for the Houthi. This seems to be a significant escalation and direct challenge to the American naval presence in the area.
When are we going to admit we’re at war?
Here’s how all this affects us.
Why should we care about the Red Sea? Isn’t that just a Middle East problem? Don’t we need to stay out of it?
It’s not that simple, really.
It’s a huge route for global trade. The Hill reports:
The Red Sea is a major shipping lane route, facilitating roughly 10 percent of the world’s commerce each year.
Sailing through the Suez Canal and down the Red Sea and Gulf of Aden offers a shortcut connecting Europe to Asia and the Pacific region; it is used by about one-third of global shipping companies.
Rerouting all the way around Africa adds some 3,000 nautical miles and up to two weeks of travel, and shipping companies are now adding the extra costs as a transit disruption surcharge or a war risk surcharge, as referred to by Israeli shipping company ZIM.
“Diverting vessels around the Cape of Good Hope to mitigate the ongoing risks of sailing through the region is a necessary step in the interest of safety, but it has ultimately brought about increased costs for carriers,” said Danish shipping giant Maersk in an advisory.
The reroutes affect 17 percent of global shipping traffic, and cargo costs for carriers are expected to soar 15 to 20 percent, according to the American Journal of Transportation.
So, our prices have already skyrocketed, and now the transportation to get things like oil and merchandise to the US are going to go up by 15-20%.
For clarity, here’s a map from The BBC, credited to Veson Nautical.
How bad will the inflation from this be?
Alan Deardorff, a professor emeritus of public policy and economics at the University of Michigan seems to think that all the cost won’t be passed on to us. He believes that consumers will be affected but that “the greater cost will be on shipping companies and their suppliers.”
“They’re [consumers] going to be hurt by it, absolutely,” he said, but noted there would be a limit in how much that could trickle down. “The effect on average price and the effect on inflation might be measurable, but I don’t think it’s going to be something people will correctly notice.”
I’m no professor emeritus, but I think it would be naive to think that cost won’t be noticeably and quickly passed on to us, the consumers.
When the price of oil is involved, that increases the price of every single thing we purchase due to transportation. And oil prices have already inched up 2% since BP suspended their Red Sea routes.
A report from CNN Business warns:
“The Red Sea, especially with the Suez Canal, is like a superhighway for shipping containers, connecting different parts of the world, particularly Europe, Asia and Africa,” said Christian Roeloffs, CEO of Container xChange, a platform that facilitates container leasing. “A huge amount of Europe’s energy supply, palm oil and grain come through the Suez Canal Waterway.”
Such is the importance of the route that the United States launched a naval mission Monday with nine other countries to protect commercial shipping in the Red Sea.
“The Red Sea is a critical waterway that has been essential to freedom of navigation and a major commercial corridor that facilitates international trade,” US Secretary of Defense Lloyd Austin said as he announced the initiative.
“As a result of these attacks, freight and insurance rates have already increased, and oil prices are going up.”
Shipping lanes in the Red Sea “are crucial to the stability of the global economy,” he added.
How much will things go up?
Remember back when that ship was grounded in the Suez Canal, and it took forever to get things moving again? We looked at the additional costs of routing around the Canal then and the reroute for the Red Sea is the same. We reported at the time:
Jonathan Roach, a container market analyst for Braemar ACM Shipbroking, told NPR:
“The large container ships, the super, mega-max container ships, can burn 100 [to] 150 tons of fuel a day,” Braemar ACM Shipbroking’s Roach told NPR.
That’s $80,000 a day in fuel and an extra 10 days travel time — both to and from Asia. “So, you’re looking at the best part of a million dollars with your operating costs. So it’s a million dollars out and a million dollars back,” he said.
In his letter to clients, Roach also noted problems at the Suez Canal could disrupt the flow of containers. A trade imbalance between Europe and Asia means that filled containers going west return mostly empty to ports in the east to be refilled. “If empty stocks dwindle in Asia, there is the short-term possibility of an increase” in prices, Roach wrote.
If this situation isn’t resolved in a hurry, we can expect more price increases and more delays for goods coming to Europe and the United States. And with Iran getting involved, hopes for a speedy resolution seem slim.
What are your thoughts?
How do you think the situation in the Red Sea should be handled? Should that shipping route be abandoned in an effort to reduce conflict with the region? Do you think Iran’s presence will escalate the skirmishes? Do you expect to see much higher prices due to this? And finally, will this be the spark that truly ignites World War III?
Let’s hear your thoughts in the comments section.
About Daisy
Daisy Luther is a coffee-swigging, adventure-seeking, globe-trotting blogger. She is the founder and publisher of three websites. 1) The Organic Prepper, which is about current events, preparedness, self-reliance, and the pursuit of liberty; 2) The Frugalite, a website with thrifty tips and solutions to help people get a handle on their personal finances without feeling deprived; and 3) PreppersDailyNews.com, an aggregate site where you can find links to all the most important news for those who wish to be prepared. Her work is widely republished across alternative media and she has appeared in many interviews.
Daisy is the best-selling author of 5 traditionally published books, 12 self-published books, and runs a small digital publishing company with PDF guides, printables, and courses at SelfRelianceand Survival.com You can find her on Facebook, Pinterest, Gab, MeWe, Parler, Instagram, and Twitter.
Thank you for the awesome report Daisy!
Yes inflation will turn up exponentially as we are already in the 3rd year of this timeline!:
https://sumofthyword.com/2016/10/04/the-rapture-of-the-church-is-after-the-tribulation/
I think the USA and allies should escort the ships and destroy and who come to attack them. This is a world problem not just the USA. Iran needs to be dealt wirh severely.
I agree with you, Kathleen.
Yep, we need to flex our muscles. We should probably just nuke them like Lindsay Graham suggested. Maybe we should nuke Russia and China while we’re at it. That would teach them a lesson.
Or! Maybe we could address the reason that the Houthi’s are attacking these ships. I am by no means pro-Hamas. Personally I think they should be treated like the terrorists that they are. BUT! I’m also honest enough to admit that the indiscriminate bombing of civilians and civilian areas in Garza constitutes a crime, and will unite the Muslim world behind Hamas and the Palestinians.
@ Lone Canadian
There isn’t any indiscriminate bombing of Gazan civilians. Hamas is completely embedded in them, with tunnels beneath everything from homes to schools to mosques and hospitals. They willingly use their own people as human shields. They have boobytrapped the buildings, even playgrounds, with IED’s. Israel has lost way more soldiers to injuries and deaths than it would have had they just bombed them. I’d suggest finding a new news source that isn’t pro Hamas.
Thanks for your accurate and level-headed rebuttal, Ani. 🙂
Screw you Ani. Nothing I said was in support of Hamas. Do they use their own people as shields…you bet. Not disagreeing with anything you accuse them of. As you note if you read my comment – they are terrorists and need to be treated as such. But please don’t give me that BS about air strikes not killing civilians in large numbers. Garza is one of the most densely populated places on earth. The Israeli government acknowledges that they have done over 1000 air strikes. And as you point out – Hamas is underground in bunkers….where the bombs will do little if any damage. When you start dropping 1000 lb bombs from planes in a densely populated area, and wiping out entire neighborhoods, civilians die in large numbers.
Yup, gotta watch out for pro-Hamas news sources…especially that TV7 out of Israel. Can’t trust those Israeli’s at all.
War kills a lot of people. That’s just the way it is. It would take a lot to define a war crime, prove it, and punish it. But in this case, point one out and show how it is worse than killing tens of thousands of civilians inadvertently in Mosul or Fallujah, where no one protested the deaths. There’s a lot of pushback in this case because it’s Jews waging the war. What international tribunal will adjudicate and punish the intentional murders of non-Muslims by Hamas on October 7? None. Because Jews are a non-favored minority group. Israel has to do it itself.
Ani, I applaud your thoughtful, wise and civil response to such an unwarranted personal attack by lone canadian.
Israel isn’t bombing them indiscriminately. In every case they have intelligence on where there are tunnels with weapons and missile launchers, and they bomb those targets. But Hamas always puts them under civilian facilities like schools and clinics. Israel can’t achieve its military objectives without inadvertently killing non-militants. However, its ratio of militant to non-militant deaths is very low, 1:1 or 1:2, much lower than any other country in other wars. It is not a crime. It’s war, deliberately provoked by Hamas.
The Arab world will not unite behind Hamas. By and large, it hates and fears Hamas. It hates Israel and Jews, but it will do that regardless of what Israel does or doesn’t do. The moderate countries like Egypt, Saudi Arabia, and the UAE, would rather see Israel put Hamas in its place. Iran, a Shiite country, created and supports Hamas, and uses its proxies Hezbollah in Lebanon and the Houthi in Yemen to try to destroy Israel. But all the rest of the Muslim world hates and fears Iran. And is rooting for Israel, though they may not say it out loud.
I’m reading a book called The Rebellion of the Dhimmis: The Break-Up of Slavery of Christians and Jews Under Islam, by Raphael Israeli. Bat Ye’Or has also written many books about dhimmitude, and Mark Durie, whose book The Third Choice describes the life of the dhimmis who made the third choice (not conversion or death). It was humiliating to the Muslim world when Western colonial powers forced it to dissolve the dhimmi contracts by which it held its Christian and sometimes Jewish and Hindu residents as slaves for over a thousand years. It feels they should still act subservient to Muslims, and cannot accept the free and flourishing Jews who have built Israel.
Absolutely. Once again, you nailed it, Cia.
I think the US reaction with limited action is telling to Hamas, Hezbollah, the Houthis, Iran and the whole world that until the US ups the military response, our inaction will on embolden them.
They and the world see weakness. I would expect their actions to become more aggressive in the coming months. They know we have a presidential election coming and anyway to cause division they will seek it.
1st marine
Indeed, in that part of the world our hesitancy is viewed as weakness. They know the Biden administration doesn’t want us to get engaged in still another war with an election coming up. And since nowadays, national policy is based on what will get someone elected, right or wrong doesn’t matter.
personally, I think we’re in deep shit!!!! and the majority of people dont want to pay attention!! my hubs is one…he thinks I’ve lost my mind…everything is fine ladedah….well, I’ve started sending him out to buy bread and few things sometimes, but truly dont think he’s paying attention – every week things go up, same things I buy every week. oh well, I’ve tried to stock, get some things, but as far as him securing home, worrying about electric/water after the fall….nah…not gonna happen..but I do believe that there’s gonna be a BIG happening this year and very soon…and people wont be prepared for it….
Great article, Daisy! Prices will rise. Iran and USA will go to war. Some American warships will probably be sunk by hypersonic anti-ship missiles that China and/or Russia have provided to Iran. In turn, Iran has given them to to both the Houthis and to Hezbollah. They will use those missiles. Muslims believe that dying in Jihad is their sure ticket to Heaven.
Sincerely in Christ,
George Theiss
USMC Vietnam Veteran
Simple, stop the GENOCIDE
Which is what Israel is doing. Hamas, and Islam, seek to genocide the Jews, and made a good start on Oct 7. Christians and Hindus, etc, will be next. Israel has made no effort to kill all Gazans, or all Palestinians.
I agree with you, Tig.
We’ve got the Panama affected by drought. The Black Sea affected by the Russia/Ukraine conflict, and now the Red Sea/Suez being affected by war in the region. Yep, I think that we will both see and feel the increased cost of shipping. But let’s face it, if things continue to accelerate in 2024 as fast as they did in 2023, shipping may be the least of our worries.
Even if the ships are diverted south of Africa the pirates will catch on and target them there potentially and alot of money and time will have been wasted.
The Houthi pirates are incapable of going that far from home. But having to go around Africa raises the costs in money and time to impractical levels. The US needs to declare real war on Yemen and Iran. Too bad we’ve frittered away our weapons and ammo on Ukraine, have weakened our military with silliness and lack of focus, and have no leadership.
Price inflation is caused by money supply inflation. It is the cost of tolerating the Federal Reserve, and it s how Americans pay for all those billions to Ukraine.
The total inflation is not likely to be much worse, but the Percent of our dollars that go to shipping will rise considerably, and yes, the retail price tags will rise.
~~~Calling self-defense “aggression” may be dishonest, but it is classic, done since forever.
~~~~Solving all this cannot be done thru warmonger means. The real solution is getting my substack IshmaelHandInHand read by a few hundred thousand Muslims, and then also Christians and Jews. We will all work together in love of the One God and His human creation. It is a Biblical Prophecy. https://ishmaelhandinhand.substack.com?utm_campaign=email-home&r=rjka5
Iran has been placated and bribed with significant sums of money by the Biden administration. None of this would have happened with Trump. Sooner or later Iran must be stopped; they are the source of all the regional instability, not Israel. And yes of course our prices will go up- no way the companies will cover it.
I agree. I just said we had no leadership, and thought that I hoped in one more year we’d have Trump. He wouldn’t tolerate this nonsense, and wouldn’t choose a course of action swayed by trying to to please Muslim voters in Michigan.
I recently picked up a copy of David Wilkerson’s book, The Vision. It is a strong reminder that we are a nation under judgment.
Good commentary on the situation and the effects it will probably have on shipping.
Maybe we’ll all get lucky and AR3536 will explode again and produce a X10+ CME, fry everyone’s gps so missile guidance systems don’t work and give the world a chance to breathe a little. The pace of global bad news is dizzying.
I have to admit that maybe a huge, fast moving and powerful solar storm that drops Elon’s and world governments satellites from orbit like big ‘ol fat raindrops wouldn’t exactly be the worst thing in the world after all. Shipping will cease without gps. I doubt many modern skippers know how to navigate by sun and stars anymore. Shipping seems to be going down anyway. But at least I don’t have to worry about who is going to give whom a nuclear suntan. Or, maybe I’m just the weird one.
It is time to be ruthless. Wipe outvas manybas we can, as quickly as we can. Collateral damage will have to be acceptable. It sounds harsh, but it is the fastestvway to put an end to this.
Lots of folks snivel about Iran. How many snivelers remember the US CIA-enabled coup in Iran in 1953 that put a dictator in place of an elected politician on US national security grounds? How many snivelers remember that folks living in Iran under this dictator suffered grievously until 1979 when another coup took place, substituting a different dictator, whose government folks also mistreat Iranian residents?
Never forget that there are folks who try to make folks miserable in order to control them. Blaming Iran, or Hamas, or Israel, or Hezbollah, or China, or Russia, or the US, is just a distraction from controllers who want to rule what will be left after the destruction of various societies all over the planet.
The Shah and his father modernized Iran and made it prosperous. Women dressed Western, many studied at the university and worked in the professions. The Revolution in ‘79 was the result of the Muslim Reformation, going back to studying the holy texts of Islam and living accordingly. Mandated daily prayers, mandated fast in Ramadan, mandated hihab, no alcohol, death to those who apostasize and give up Islam, death to Jews, often to Christians, to gays. All part of the sharia. Isis followed the rules to the letter. The Iranian Revolution was a spark which spread to many Muslim countries, which experienced their own return to the roots of Islam.
How much will things go up you ask Daisy. How about zero. Prices will go down not up. All of you people are forgetting that this is an election year and the globalist controlled democrat party/deep state will do everything they can to make Biden look good. I expect this puppet to be replaced by another more palatable puppet. But Biden/Biden 2.0 must win this election. Donald Trump is an existential threat to the PTB.
At some point the Biden mouse will roar and squash the Houthis and the msm will propagandize 24/7 about how much better off everyone is with the democrats in power. Remember Donald Trump according to them is a threat to democracy. That’s why democrats across the nation are trying to remove Trump from the ballot and ban write in votes for him. They want you to believe “FREEDOM IS SLAVERY and IGNORANCE IS STRENGTH”
We are living George Orwell’s novel 1984 and Biden’s poll numbers show that a huge number still think this traitor is a patriot and Donald Trump is the villain. Mark my words. 2024 will be 1984 in the extreme. I hope I will be wrong. But that is what I see coming.
Wars start where, and when, the Banksters want them to.
Isn’t attacking commercial ships at sea an act of war?
What is the UN (Useless Nitwits) going to do about it?
After all, they want to run the world, don’t they?
Why can’t ships bringing goods to US go from Taiwan to the west coast via the Pacific Ocean?
The world is headed into deflation. Not inflation. This is a 100 year cycle event.
Hold your breath for $2 gas & burger.
How do you think the situation in the Red Sea should be handled? A credible use a naval power must be deployed to eliminate Houthi positions to ensure the shipping lanes are traversable.
Edited for “typo” – How do you think the situation in the Red Sea should be handled? A credible use of naval power must be deployed to eliminate Houthi positions to ensure the shipping lanes are traversable.
Shut down the Red Sea on *our* terms: nothing in and nothing out until the Houthis suddenly become ‘quiet’ somehow…
We all agree; these are acts of War which will eventually need answered with like weapons. As much as (Obama)Biden will try to drive prices down for the election, I see more chaos and higher prices because “they” cannot control it. So-what are we preppers doing about it? Personally, I continue to stock up on canned goods, meats, and other goodies that are marked down for the after holidays sales. For just grins, I purchased 4 bags of Godiva chocolates at $4 each. It will be fine in the freezer. The car got serviced and is gassed up-it might be important in the coming weeks. The dogs are up to date on shots, grooming, and clean teeth. I visited a thrift store to check on winter-y things at a discount. When a civil war hits, we will all be where we are, with what we have. Continue to prepare.
Winner winner chicken dinner! Exactly Sandra T.
Keep prepping. Keep taking advantage of those post holiday sales and line your nests with down. These issues are too great and numerous for any one or one thousand of us. Inflation/deflation, Biden/Trump, Houthies, Hamas, Hezbolla, Ukraine/Russia, China/Taiwan, and on, and on, and on…
It never ends, this crap. But, as preppers, we can be a force of good for ourselves, families, and friends.
There was an old video, I don’t know where to find it now, that boasted of recruits from other countries graduating from a Russian university. They were recruited from Arab countries and Iran by the KGB/FSB and included the top mullahs ruling Iran, Abbas of the PLO, and other so-called Muslim leaders. “So-called” because they are not really Muslim. But by pretending to be hyper Muslims, they lead many Muslims into the worst aspects of Islam.
The October 7 attack on Israel was a birthday gift to Vladimir Putin.
The Soviet plan leaked to the West by defectors was that the communists would pretend to give up power in Russia, then distract the U.S. by using its proxies in other countries to take the blame for attacks on Western nations. Then once we have over-extended our forces, depleted our supplies while taking our eyes off Russia, they then would attack with nukes (they don’t believe in MAD nor nuclear winter) followed by large numbers of troops. They hoped that traitors in our government would have succeeded in civilian disarmament already. That ain’t gonna happen.
A few things didn’t go according to plan. Poland, later Ukraine, kicked out their puppet governments to try to chart their own courses. The same with the Baltic states.
Hamas and Houthis are Iran proxies, and Iran is a communist Russia proxy. WEF is another communist Russia proxy. We know their plan, but we don’t know their time table. Each year looks more dangerous. What do you think?
The approach I intend to take to the coming high prices is to cut back on what I buy and buy American made as much as possible. I don’t think my family is unusual in that we’ve bought a lot of stuff over the years that was unnecessary. I’ve already cut out buying stuff from China. Gasoline is a thornier issue, but we have cut back on how many times we leave the house. We’re trying to buy more local produce and hope to have a garden this year. It’s not easy with arthritis but we’ll do what we can.
What are your thoughts?
How do you think the situation in the Red Sea should be handled?
My reply: UN naval escort of shipping while a coalition of nations’ special operations forces go into the areas where the terrorists are hiding and bring them out for trial under Crimes Against Humanity.
Should that shipping route be abandoned in an effort to reduce conflict with the region?
My reply: Absolutely not.
Do you think Iran’s presence will escalate the skirmishes?
My reply: Yes. Definitely.
Do you expect to see much higher prices due to this?
My reply: Yes. Until the situation is rectified. Then prices will go back to 25% higher than originally.
And finally, will this be the spark that truly ignites World War III?
My reply: I do not think so.
Just my opinion.
Jerry D Young
Jerry D Young
Hope for the best, prepare for the worst, and always remember TANSTAAFL
(“There Ain’t No Such Thing As A Free Lunch” Manny, from The Moon Is A Harsh Mistress by Robert A Heinlein
Don’t worry Somali Pirates will provide security for all Cargo ships diverted around Africa.