Why do Red Sea attacks push higher coffee prices?

Houthi attacks in the Red Sea and nearby waters hit three ships in one day in July, including Maersk and MSC vessels. MSC suspended services at Djibouti port, the sole export channel for Ethiopia and a route where MSC carries about 80 percent of shipping capacity. Traders now face booked space with no sailing dates.

The pressure builds on higher coffee and high price coffee trade because Djibouti is the gateway for Ethiopian exports, and disruptions there tighten supply and lift freight costs. With strikes expanding beyond the usual threat zones, shipping rates and coffee trading prices are likely to rise further, leaving buyers with delays and uncertain arrival times.

Attacks by Yemen's Houthi armed group in the Red Sea and surrounding waters continue to escalate, with three ships targeted in a single day, further heightening regional tensions. Vessels owned by Maersk and MSC were successively targeted, and MSC even announced a full suspension of services at Djibouti port due to the ongoing threat. Djibouti port is the sole channel for Ethiopia's cargo exports, with MSC accounting for 80 percent of the port's shipping capacity, and this move has dealt a severe blow to Ethiopia's coffee exports. Coffee traders face the dilemma of having booked space but no shipping date, high freight rates, and no guaranteed arrival times, while the Houthis' expansion of their strike range beyond traditional threat zones is likely to further drive up shipping costs and coffee trading prices.

Recently, Yemen's Houthi armed group has once again launched military operations, carrying out three attacks in just one day, causing tensions in the Red Sea region to continue rising.

According to the latest reports, Yemen's Houthi armed group claimed on July 12 that the organization used missiles and drones twice in the Red Sea and the Bab el-Mandeb Strait to strike the Liberian-flagged oil tanker "Chrysalis." In addition, on July 9 local time, a Houthi spokesperson issued a statement claiming that attacks were launched that day on the "Maersk Sentosa" and "Marthopolis" in the Arabian Sea, as well as the "MSC Patnaree" in the Gulf of Aden.

It is reported that the "Maersk Sentosa" belongs to Maersk, the world's largest container shipping company, while the "MSC Patnaree" is owned by another shipping and logistics giant, MSC.

Maersk confirmed to the media that the captain of its "Maersk Sentosa" reported an explosion near the vessel during its voyage, but the ship suffered only minor damage and is still continuing its journey. MSC stated that several of its ships were attacked because the Houthis identified them as "Israeli vessels," and that at the time of the incident the ship was sailing from Berbera port in Somalia to Colombo port in Sri Lanka.

Amid the ongoing Red Sea crisis, foreign vessels have been subjected to at least 15 Houthi missile attacks, with several large ships suffering slight to moderate damage, incidents of sailor deaths, and some smaller vessels sinking.

This situation has severely affected Djibouti port. Djibouti port is the sole channel for all of Ethiopia's cargo exports, and the port is mainly dominated by MSC, which currently accounts for 80 percent of the port's transport capacity. However, MSC recently announced that it will completely suspend services at Djibouti port.

MSC's suspension of routes to Djibouti port will deal a heavy blow to Ethiopia's cargo exports, especially the country's coffee exports—coffee accounts for a significant share of Ethiopia's exports. As a result, an international coffee trader reported that although customers have already booked coffee shipments, there is currently no specific shipping date; even if the company is willing to pay higher freight rates, the arrival time cannot be guaranteed.

Statistics show that the Houthi armed group's attacks on commercial vessels in the Red Sea and Gulf of Aden in June were the highest monthly number since 2024. This latest attack since early July also occurred outside the Houthis' traditional threat zone.

In fact, Ethiopia's coffee exports had already faced many difficulties, the main reason being that the Red Sea crisis forced shipping companies to detour around the Horn of Africa, reducing vessels at Djibouti port and causing coffee cargo to pile up there.

Given the current situation, the Houthis have expanded their strike range and the threat continues to escalate, which may once again push up shipping prices and prolong shipping times. For coffee, which relies on shipping trade, higher shipping prices will also indirectly drive up coffee trading prices.

The above content is compiled by CoffeeHunters, a coffee news website.