The Red Sea's other strait: why Bab el-Mandeb matters

The week’s coverage of the region’s shipping chokepoints has been dominated, naturally enough, by the Gulf and by the strait that the Gulf’s tanker traffic must pass, and the headlines have followed the insurance rates with the attention that fear deserves. The Red Sea’s other gate has been doing its quieter work in the same week: the strait of Bab el-Mandeb, the twenty-kilometre passage between the Arabian peninsula and the Horn of Africa, through which a third of the world’s container traffic once moved and through which, in a bad month, almost none of it moves at all. The strait is the hinge of the Suez route, and the hinge has been swinging hard.

The geography explains the vulnerability. Bab el-Mandeb is the throat of the Red Sea, the point where the ships that use the Suez Canal must pass within sight of both shores, and the shores belong to countries whose politics the shipping industry does not control. When the attacks on merchant shipping began two years ago, the strait became the first place that the rerouting decisions were made: the operators who judged the risk unacceptable swung their fleets around the Cape, adding two weeks and a third of the fuel bill to every voyage, and the ones who judged the risk acceptable kept running the strait at a price that the insurance market set and the insurance market will always set. The traffic through the Suez Canal fell by half, and the two routes, the long way and the dangerous way, have been competing for the cargo ever since.

The economics of the choice have been the most under-reported part of the story. The rerouting was described in the early coverage as a crisis and in the later coverage as a new normal, and both descriptions were true at different moments. The freight rates that the longer route justified became the benchmark that the operators now price against, the capacity that the industry ordered during the boom years turned out to be exactly enough to absorb the longer voyages, and the global supply chain, which was supposed to shatter when the strait closed, quietly reorganised itself around the extra two weeks. The resilience was real, and it had a cost: the emissions of the longer route, the congestion at the ports that the rerouted ships reached in batches, and the slow shift of the world’s trade toward the routes that the insurance market can guarantee.

Bab el-Mandeb has become the clearest example of a new rule of the global economy: the world’s trade routes are no longer protected by the navies of the old order but by the calculations of the insurers, and the insurers price risk with a precision that the flag states never managed. The strait remains open in the legal sense; the traffic through it is set by the premium, and the premium is set by the last incident. The shipping lines that decided this month to resume the strait route did so because the rate fell to the level where the fuel savings outweighed the fear, and the decision was made in the boardrooms with the same spreadsheet logic that closed the route two years ago.

The security questions that the strait raises are not new, and the answers are not getting easier. The patrols that the regional navies have run through the waterway have reduced the incidents without ending them, the escort systems that the commercial ships have adopted have spread the risk without removing it, and the politics of the region’s coastlines are no more settled than they were when the attacks began. The route will keep operating at the margin, with the traffic set by the premiums, and the world will keep buying the goods that the strait carries on the terms that the insurance market sets. Bab el-Mandeb is a strait that the world cannot replace, cannot protect and cannot ignore, and the week’s coverage of its northern cousin should be read as a reminder that the Red Sea has two doors, and that both of them swing.