Ships Carrying Chinese Cars Aren't Being Targeted By Houthi Militia

Yahoo

15 hours ago

Starting in November 2023, the Houthi militia in Yemen started attacking or capturing commercial ships sailing through the Red Sea and Suez Canal, as a matter of solidarity with Palestinians in Gaza. According to a new report, however, the rebel group suddenly started making a very specific exception this summer. Since June, certain car-carrier ships dared to make the voyage, and none of them were messed with. What did all these ships have in common? They were only carrying cars made in China.
As the New York Times reports, this almost certainly means that China cut a back-channel deal with the Houthis, either directly or through their main sponsor, Iran. The latter is an oil power; crude exports are 6% of its whole economy. Who buys all that oil? Almost entirely China. So the Asian superpower has a lot of pull here.
Strangely, this new arrangement does seem to be particular: they're ships carrying Chinese cars. A handful of non-Chinese ships, but also carrying such cars, have made it through. Conversely, all Chinese cargo ships that aren't carrying cars are still avoiding the route.
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China's Push Into The European Automotive Market
China's presence in the European automotive market has been growing by leaps and bounds. In April, Chinese cars made up nearly 5% of the entire thing, double what it was only a year earlier. Some estimates have that going all the way up to 10% by 2034, per S&P Global.
In response, the European Union has slapped tariffs onto Chinese cars that receive subsidies from the Chinese government, going as high as 35%. Since cheap prices are one of the core draws of these vehicles, it makes sense that companies would be pretty desperate to find ways to compensate for the tariffs.
They might have found one. Avoiding the Red Sea adds 14 to 18 days to the voyage, which means a bunch of extra costs for fuel, crew, and maintenance. That works out to a few hundred dollars per car; since some of China's massive new ships can carry 5,000 cars each, the financial hit is in the millions. If those ships can literally take a shortcut, that's a huge savings for carmakers that they can either pocket or pass on to consumers.
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