July Sees Escalation of Red Sea Attacks and New Port Investments in Syria and Iraq
July marked a sharp escalation in Houthi attacks on commercial shipping lanes in the southern Red Sea. Two Liberian‑flagged, Greek-operated bulk carriers, Magic Seas and Eternity C, were sunk by Houthis using drones, missiles, and rocket‑propelled grenades.
These incidents marked the first major Red Sea assaults in months and brought renewed scrutiny on shipping through Bab al‑Mandeb.
In response, vessels have begun broadcasting AIS messages indicating nationality and even religion of the crew to avoid perceived association with Israel and reduce risk.
Port Disruption and Israel’s Eilat in Crisis
Israel’s sole Red Sea port, Eilat, faces near‑total shutdown. Activity has collapsed by over 90% since October 2023 due to ongoing attacks. Mounting losses of roughly US$1.2 million monthly have pushed the port to the brink - its bank accounts froze by mid‑July, and it ceased operations entirely on July 20, 2025.
Port CEO Gideon Golber urged the Israeli government to provide subsidies of up to US$500,000 per vessel to encourage rerouting of traffic back to Eilat, highlighting the strategic importance of sustaining maritime connectivity to the Red Sea corridor.
Infrastructure Projects and Trade Corridor Expansion
In a standout infrastructure move, Syria inked an US$800 million deal in July with UAE’s DP World to upgrade port infrastructure and establish logistics services at Tartous - opening Syria back into Middle Eastern trade networks post‑sanctions.
Meanwhile Iraq’s Development Road project, anchored by the Grand Faw Port, is gaining significant traction. The TIR carnet system went fully live on April 1, reducing transit time to under a week for trucks moving from Iraq toward Turkey and beyond - a major enhancement over previous sea‑route durations of 14+ days.
On July 20, the Iraqi Ministry announced further plans along the corridor - including establishment of industrial cities and a smart urban development within the Grand Faw complex - intended to reinforce Iraq’s role as a regional logistics hub.
Freight Market Trends and Modal Shifts
Maritime logistics through the Red Sea has effectively shifted toward rerouted voyages via the Cape of Good Hope. These diversions have extended transit times by 10 to15 days, tightened shipping capacity on key lanes, and pushed up freight rates and port congestion in hubs such as Singapore and Rotterdam.
Despite global ocean freight overcapacity, routes avoiding the Red Sea and US tariff-affected ports have drawn demand - helping maintain utilization rates around 86–87% on rerouting corridors.
At the same time, tanker bookings for moving oil from the Gulf to Asia have slowed amid elevated war-risk premiums tied to the Israel-Iran conflict.
Outlook
July 2025 underscored the escalating urgency in Middle East logistics: conflict‑driven disruption in shipping routes, voluntary rerouting as the de‑facto standard, and critical aerospace and financial shifts toward resilience. Strategic investments - both physical (ports, corridors) and financial - are underway to adapt to a fragmented logistics landscape.
The region is doubling down on logistics diversification and adaptive capacity. Amid uncertainty, operators and nations alike are preparing for a new normal: longer sea lanes, rising insurance costs, and steadily improving land‑bridge alternatives.
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