According to Bloomberg, merchant ships owned by China are receiving substantial reductions in their insurance premiums while traversing the Red Sea. This development underscores the impact of Houthi attacks in the region, affecting the business interests of vessels linked to Western entities.
In mid-November, militants initially targeted vessels associated with Israel and later expanded their focus to include ships from the US and the UK after the two nations bombed Yemen in an attempt to counter the attacks. These events have given rise to a nuanced insurance market, where underwriters distinguish between the various carriers they provide coverage for.
As informed, despite the varied landscape, certain vessels affiliated with China are securing insurance for transit at rates as low as 0.35% of their hull and machinery value, as reported by individuals within the market. The majority of ships fall within the range of 0.5% to 0.75%, with notable variations, according to sources. These discounts result in potential savings ranging from $150,000 to $400,000 for a transit involving a vessel with a hull-and-machinery value of $100 million.
Furthermore, Chinese carriers are gaining an advantage by obtaining cheaper insurance and using a safer shortcut between Asia and Europe. Many vessels are avoiding the risky Red Sea route, opting to sail around Africa instead. Despite Houthi attacks, there have been no significant reports of damage to Chinese-owned vessels. The Houthis claim to act in solidarity with Gazans amid Israel’s conflict with Hamas.
Approximately 27 vessels with digital ship-tracking records indicate Chinese ownership, crew, or both. The Houthis assured the safety of Chinese and Russian ships from attack, although this assurance does not extend to the cargoes these vessels transport.
