Due to the ongoing Houthi attacks, Carnival will change the course of 12 ships of seven brands scheduled to sail the Red Sea in May, joining the growing number of companies that bypass this key transit route.
Carnival said the company made the decision to avoid the area after consulting with security experts and authorities.
"Due to the situation in the Red Sea, the company does not see booking trends affected and there are no other Red Sea crossings until November 2024," Carnival said. "The loss should be offset by higher-than-expected bookings, which have reached an all-time high since last November. ”
The Miami-based cruise operator said the decision will have an impact of 7 to 8 cents on its 2024 earnings per share, with most of the financial loss coming in the second quarter.
Earlier this month, Carnival's rival, Royal Caribbean, said it had canceled two voyages in the Red Sea due to safety concerns.
Many energy and shipping companies have halted traffic through the Red Sea due to missile and drone attacks on ships and oil tankers in Houthi-controlled areas. The Yemeni-based militant group, backed by Iran, said it attacked ships that supported Israel's fight in Gaza.
Houthi attacks in December prompted BP to suspend oil shipments through the Red Sea, pushing up oil prices in recent weeks and leading to warnings from Ikea of possible product shortages.
On January 26, the group went on patrol in the Gulf of AdenUnited States**fired** a missile, forcing it to shoot it down, and striking a British ship, their attack on sea traffic continued. The attack marked a further escalation of the largest naval confrontation the U.S. Navy has faced in decades in the Middle East.
Since January 11, the U.S. has launched airstrikes against the Houthis, following weeks of attacks on merchant ships by the militant group.
Lydia Boussour, senior economist at Ernst & Young (EY), said that while experts warn that the escalating conflict over the Red Sea and the Suez Canal could push up energy costs, for now, the situation will not significantly change the global inflation outlook.
"However, the protracted conflict, combined with shipping costs remaining high until 2024, could add 0. to global inflation this year," she said in a note to investors7 percentage points. ”
Goldman Sachs analysts pointed out that the cost of shipping globally has risen significantly due to shipping disruptions, but they do not expect it to affect consumers.
"We believe the risks to this recovery are limited, as the rise in shipping costs is taking place in a relatively benign macro context, which reduces the scope for scaling up through the chain, and the cost of shipping is only a fraction of the final consumer product," they wrote in a research note. ”