The Red Sea Crisis: Developments in 2024 and Expectations for 2025

The recent security issues in the Red Sea and the Gulf of Aden have been a critical topic of discussion. A December report by ShippingWatch revealed that the Houthi movement has offered safe passage guarantees to shipping companies willing to sever ties with Israel. This proposal raises significant concerns regarding risk management and compliance with international law.

Throughout 2024, the Houthis intensified their attacks, particularly targeting vessels connected to Israel. These attacks not only caused security challenges but also directly disrupted trade flows and freight rates in the region. As we enter 2025, it is essential to consider how we can prepare for both legal and operational risks.

In 2024, the Houthis expanded their targeting criteria. They no longer focused solely on vessels directly linked to Israel but also targeted ships with past trade or indirect connections to the country. For instance:

• Missile attacks, unmanned aerial vehicles (UAVs), and underwater explosive devices were deployed.
• Many companies rerouted their vessels via the Cape of Good Hope, opting for longer and more expensive routes to mitigate risks.

These attacks increased logistical costs, extended transit times, and disrupted global trade balances. The Houthis’ offer of safe passage to shipping companies severing ties with Israel must be carefully evaluated in terms of compliance with international law, insurance coverage, and commercial risks.

We have seen P&I clubs issue frequent updates about the crisis in the region, often providing critical guidance to the sector. Below are some key recommendations they emphasized, including concerns about the validity of agreements with the Houthis:

• Shipowners are advised to conduct thorough risk assessments before entering the region, adhere to BMP5 guidelines, and take necessary measures to ensure crew safety.
• The deactivation of AIS (Automatic Identification System) has been suggested in some cases. However, according to Skuld, keeping AIS off does not entirely prevent attacks, as the Houthis’ targeting methods are not solely dependent on AIS signals.
• Skuld also emphasizes ensuring that war risk insurance policies explicitly cover attacks involving UAVs and missiles deployed by the Houthis.
• War risk policies should be comprehensive and account for all potential scenarios, including collateral damage and misidentification risks. They also stress that any agreements with the Houthis must be scrutinized for compliance with international sanctions and maritime law.

Houthi attacks will likely continue, driven by regional developments. New conflicts or tensions involving Israel could introduce additional risks for the maritime sector.

Insurance companies may further expand their war risk coverage, but companies should carefully review the details of these policies and update them as needed. In this environment, legal and operational preparedness is critical.

1. Review your charter party agreements to reassess clauses related to force majeure, route deviations, and safe port provisions.
2. Clarify the scope of your war risk insurance Ensure that specific risks, such as UAVs, missile attacks, and collateral damage, are explicitly covered.
3. Compliance with international law and sanctions is Any agreement with the Houthis could invalidate your insurance policies or lead to legal liabilities.
4. Implement BMP5 protocols, train your crew to handle risks, conduct onboard emergency drills, and maintain constant communication with organizations like UKMTO and

2025 is shaping up to be another challenging year for maritime operations in the Red Sea. However, with effective risk management and solid legal preparation, it is possible to navigate this crisis with minimal impact. Remember, while short-term solutions may seem attractive, long-term risks must not be overlooked.