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Chinese shipping companies cash in on the Red Sea crisis

chinese shipping company
chinese shipping company

Chinese shipping companies have ramped up transits through the Red Sea as they bet on immunity from Houthi attacks.

A flurry of smaller shipping companies are making new journeys through the Bab el-Mandeb Strait broadcasting that they are from China, according to experts.

Chinese-linked container ships accounted for less than 15pc of Red Sea transits last year, according to Lloyd’s List. By the second week of January, the share had nearly doubled to 28pc.

The entry of new Chinese-flagged vessels comes despite continued missile attacks on ships by Iran-backed rebels. Houthi rebels have been attacking Western ships in retaliation for Israeli military action in the Gaza strip.

Chinese companies appear to be banking on immunity from attacks because of alignment between Iran and China, which imports oil from the Middle Eastern nation.

Cichen Shen, of shipping journal Lloyd’s List, said: “We haven’t seen any reports about China-linked ships being attacked by the Houthis.

“There seems to be a tendency that Chinese or China-linked ships are widely viewed as a safer asset to transit the Red Sea. At least within the Chinese shipping community, that’s definitely the sentiment right now.”

Simon Johnson, professor at MIT’s Sloan School of Management and former chief economist to the International Monetary Fund (IMF), said: “There is an axis of Russia, China and Iran.”

Large container traffic has plunged by as much as 90pc since Houthi rebels ramped up attacks on ships travelling off the coast of Yemen. Western ships travelling between Asia and Europe have rerouted en masse around the Cape of Good Hope to avoid missile strikes.

As Western operators pull back, Mr Shen said Chinese vessels were seeking to “to profit from that high-risk but high-reward market”.

In January, Qingdao-based Sea Legend launched a service linking Turkish ports with China via the Red Sea, using seven ships.

China United Lines has also launched a new Red Sea Express service travelling between China and Saudi Arabia.

Mr Shen added: “I have been told that some of the smaller, emerging Chinese carriers are also considering calling at ports in Yemen, where obviously no European ship would take the risk.”

Ships have been using their automatic identification systems (AIS) to send messages to the Houthis that they are Chinese.

While Chinese companies are undoubtedly ramping up activity in the area, Richard Meade, editor at Lloyd’s List, suggested the true number may be exaggerated. Crews may be claiming allegiance to China in order to avoid attack, he said.

Mr Meade said: “Initially the messages said ‘armed guards on board’. Then ‘no contact with Israel’ became the favourite. Now, the more common one is ‘Chinese vessel. No contact with Israel’ or ‘All Chinese’.

“Whether that is true or not, the ship owners or the ships themselves believe that having the badge of China visible is enough of a deterrent to would-be attackers for them to feel safer going through.”