'Destroyers or Spreadsheets. Who commands the Red Sea?'
- Michael Arkhipov
- Oct 6
- 2 min read
The Red Sea links Asia to Europe. Since late 2023, ships there have faced drone and missile threats tied to the Yemen conflict. A U.S. led mission began patrols, and several navies now escort or protect traffic. Yet alerts and strikes have kept insurers cautious, so for many, the “safe” choice has been the long way around Africa, costly in time, fuel, and crew hours, but easier to insure.
A captain opens an email from London. Not orders from a navy, but from underwriters, the people who price risk. The message says the southern Red Sea is high risk. The extra “war-risk” cover will cost about 1% of the ship’s value for a single transit. On a big vessel, that’s hundreds of thousands of dollars. The captain redraws the route around the Cape of Good Hope. One price. New route. Different world.
Markets turn fear into numbers. When attacks rise, the chance of loss rises. Insurers lift the premium to match that higher expected loss. Warships matter only if they push that number down in a way underwriters trust. If they don’t, the price stays high and the Suez route stops being the default. In 2024 the shift was stark: Suez traffic by tonnage fell about 70%, capacity across the Gulf of Aden fell roughly 76%, and arrivals via the Cape rose around 89%. No law changed. Price did.
More destroyers alone will not fix this. To move that number, governments must prove risk is lower in ways actuaries actually accept: convoy schedules announced early enough for planners to book weeks ahead; real-world proof that ship-defence kits work; fast, open incident reports so models can update; and steady, credible data that cuts uncertainty day by day. If those steps reduce losses, and the evidence is trusted, the premium falls. If not, ships keep rerouting south.
Someone pays the bill. Longer routes mean more fuel is consumed, more days are spent at sea, and tighter port schedules - a slower turnaround overall. Some goods arrive late. Some prices increase, especially for containerised retail and fuel cargoes. Egypt loses canal fees when ships skip Suez. Firms adapt by holding more stock near buyers, building backup routes and suppliers, near shoring some production, or paying the premium and passing on the cost. Supply chains become a bit slower, but harder to break.
Until governments can lower the price of safety in London, the Red sea is commanded by the premium, not the fleet.
Michael, markets react whilst militaries decide. Insurers can calculate risk, but only after the missiles fly. The premium doesn’t create danger; it only reflects it. When Houthi attacks escalated in late 2023, the Red Sea did not become perilous because of an actuarial table in London - it became perilous because armed groups on the Yemeni coast could strike ships with drones and anti-ship missiles. Only destroyers and carrier groups can change that physical reality. Insurance doesn’t make the waters safe; it only prices how unsafe they are. The Red Sea is not commanded by spreadsheets, but by the vessels that patrol it.
You write that the premium commands the sea, yet that very premium depends on whether the fleet commands it first. Underwriters only lower rates when they trust the destroyers can keep trade routes open. Convoy schedules or risk models have meaning only because adversaries know those warships can shoot back. The credibility of the spreadsheet rests on the credibility of the gunmetal beneath it.
In the end, the fleet writes the premium. The market may measure fear, but only destroyers can end it. Until an actuary can intercept a missile over Bab-el-Mandeb, command of the Red Sea will always belong to those who sail through it, not those who price it from afar.