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Yemen, persian Gulf and Gulf of Aden

About 10 years ago, Peter Zeihan (global marco forecaster), made an interesting comment that since the early 1990s the US had made slow but inexorable changes to its military.  The US Navy was focusing on carrier groups and downsizing its global military presence.  Aside from Japan, the US military has largely withdrawn from the world.  You have to go back to the early 20th century to see so few US military personnel posted around the globe.  At the same time, the US destroyer fleet was not replaced.  From having nearly 600 destroyers at the end of WWII and even having nearly 400 in 1970.  As of 2023, the US Navy has a total of 70 destroyers, 40 of which are attached to carrier groups.  The destroyer is the primary tool to ensure the freedom of the seas.  The carrier group is not really useful for that, it's like using a sledgehammer to kill a fly.

Peter Zeihan predicted that cheap global shipping would be destroyed by the withdrawal of American forces.  The impact of the withdrawal would take some time to register.  The global order is now changing, and new actors are participating.  For the past six months, most container ships are no longer using the Suez Canal and have re-routed via Southern Africa.  Attacks on shipping are mostly located either in the Persian Gulf, or the Gulf of Aden, and very few in the Arabian Sea.  Effectively, this has doubled the European shipping time, or halved Europe's shipping capacity (which translates into higher shipping charges).  BTW this is why the recent blockage of the Suez Canal had no impact on goods shipped from Asia, they were already gone.

Zeihan's view of global shipping was that its collapse would be a threefold process; first, there would be minor attacks that would lead shippers to take longer routes, increasing the cost of shipping.  The second phase would see "real vessel damage" that would lead to a massive increase in shipping insurance (rates are up about 25% based on the Southern shipping route), third the value of shipped goods will increase (because only valuable goods will be shipped), and new players will participate in the seizure of container ships.  Further adding strain to the global shipping business.

Zeihan's point was not that this would be done by any specific players (such as Iran --although they are involved), but rather bold new pirates would emerge knowing that the Americans were gone.  Why Zeihan is so good, is because his predictions are not based on the action of a single player, but on the global change in circumstances.  Is it the American's fault?  No, America created globalization as a tool to reduce conflict in Europe and create a fighting force against the Soviet Union.  That job was done in 1989.

My friends who work in Lloyd's re-insurance market tell me that new policies are harder to write because of flagging appetite by syndicates.  The reality is that so far claims have been small (they are growing), but participants are reducing risks.  What Florida homeowners have already discovered and something that the global shipping industry is now learning.  A lower appetite for risks means much higher insurance premiums.

Note:  Overnight the American forces in the Gulf have attacked Houti's position, following a missile attack on an American military vessel, the replay of something that happened in 2016.  I have no idea how serious this is because the US has given little data except to say that they focused on command and control positions, and ammo dumps.  

The only lesson for the Houti is not to shoot missiles at the American Navy.



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