DP World, a key Dubai-based port operator, reported earnings on Thursday, showing a ~60% profit plunge due to Red Sea attacks by Yemen's pro-Iran Houthi rebels, who claim to be retaliating for Israel's assault on Gaza, the Associated Press reports.
During the same reporting period last year, DP World recorded $651 million in profit. A year later, thanks in part to ongoing Houthi attacks on the Red Sea shipping lane, DP World's profits are down to $265 million.
"The year 2024 has been marked by a deteriorating geopolitical environment and disruptions to global supply chains due to the Red Sea crisis," DP World chairman and CEO Sultan Ahmed bin Sulayem said in a statement carried by Dubai media.
Bin Sulayem did not provide specific details as to the Red Sea losses, but suggested the company was still in a position to deliver "stable" full-yearadjusted profits.
DP World operates through Dubai's Jebel Ali Port, and while the Houthi campaign is said to be targeting U.S.-, UK- and Israeli-linked ships, others are suffering from the onslaught as well, and shippers have been forced to take the long way around, avoiding Dubai, and traveling around the Cape of Good Hope in southern Africa.
In mid-July, Goldman Sachs' latest supply chain congestion briefing noted that for the first time in 1.5 years, the supply chain congestion index was on the verge of rising from two to three, with 10 being the most congested. This resurgence in snarled supply chains is driven mainly by increasing container ship backlogs and soaring ocean container shipping rates, partly due to the Houthi campaign.
Earlier this month, shipping giant Maersk told media that the supply chain was at a breaking point, with its CEO stating: "The fallout of the Red Sea situation is continuing to cascade across the world, creating challenges for supply chains and our customers.
By Charles Kennedy for Oilprice.com
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