Estimating the Impact of Houthi Military Action On Shipping Traffic Through the Bab el-Mandeb Strait

In this paper I estimate the effects of military action by the Houthi rebels in Yemen on international shipping through the Bab el-Mandeb Strait. Given the increased security concerns and dangers faced by ships, there has been a considerable decline in the shipping traffic traversing the strait. Disruptions to the Bab el-Mandeb Strait, which feeds into the Red Sea, have led many ships instead electing to take the longer alternate route around the African continent. Using shipping and attack data in the Bab el-Mandeb Strait from January 2022 to October 2024, I design a quasi-experimental Difference-in-Differences (DID) model to estimate the drop in shipping traffic relative to a control, the Strait of Malacca. Using five different military milestones in the period as different treatments, the model returns a small decrease in the daily average ship traffic following the first Houthi attack on Israel, significant up to the 90% confidence level, and a small, but statistically insignificant decrease following the first Houthi attack on international shipping. In addition, the data show a considerable reduction in shipping through the Bab el-Mandeb Strait relative to the control, following Operation Prosperity Guardian, Operation Poseidon Archer and Operation Aspides, a series of international military coalition operations. These results are statistically significant up to the 99% confidence level and estimate a reduction in the strait’s daily traffic of 21, 39, and 34 ships respectively, a considerable amount given the Bab el-Mandeb Strait experienced a daily shipping traffic average of 74.7 ships over the year prior to the first treatment. The DID results suggest a delayed shipping response to Houthi military action, with small decreases in shipping traffic before seeing a dramatic decline as the crisis continued to carry on and militarily escalate in nature around the turn of this year.