The Houthis are making Amazon, Ikea and Walmart change course
Houthi attacks in the Red Sea make the Suez Canal impassable and force companies to rethink their logistics. Here's what's happening. The point of Agi
The Toymaker Basic Fun team that oversees sea shipments of Tonka trucks and Care Bears for Walmart and other retailers are scrambling to reroute goods away from the Suez Canal following attacks by Houthi rebels on ships in the Red Sea. Suppliers such as Ikea, Home Depot, Amazon and retailers around the world are doing the same, as companies grapple with the biggest shipping disruption since the Covid pandemic threw global supply chains into chaos.
SHIPPERS AVOID THE SUEZ CANAL
Florida-based Basic Fun usually ships all Europe-bound toys from its Chinese factories through the Suez Canal, the quickest way to move goods between those regions, CEO Jay Foreman told Reuters from his Hong Kong office.
This trade route is used by about a third of global container ship cargo, and rerouting ships around the southern tip of Africa is expected to cost up to $1 million more in fuel for each round trip between 'Asia and Northern Europe.
THE ALTERNATIVES
Drone and missile attacks by Yemeni Houthis in the Red Sea in support of Hamas in Gaza have upset Basic Fun's plans. The company is now working during the holidays to send toys from China to the ports of the UK and Rotterdam via the longest route. And it is also diverting some cargo bound for U.S. East Coast ports from the Suez Canal to the Panama Canal, while moving more to the West Coast via the direct route to the Pacific Ocean.
“It's just going to take longer and cost more,” Foreman said, explaining that tariffs for some China-UK goods have more than doubled to about $4,400 per container since the conflict between Israel and Hamas began.
THE MAJOR IMPACT IS YET TO COME
The situation in the Suez Canal is evolving rapidly and shippers Maersk and CMA CGM are moving to resume voyages through the Red Sea with new military escorts offered by the US-led international maritime task force.
According to Michael Aldwell, executive vice president of maritime logistics for Switzerland-based Kuehne + Nagel, the biggest impact will likely come in the next six weeks. “You can't flip a switch” and rearrange global shipping, noted Aldwell, who expects diversions to lead to a variety of problems, such as drought conditions forcing the Panama Canal to limit transits to due to insufficient water to operate the huge locks. Problems that will probably cause transport prices to skyrocket in the short term.
CHAIN REACTIONS
Shipping experts say the detour around the Cape of Good Hope, which adds seven to 14 days of sailing to Europe and five to seven days to the U.S. East Coast, has set off a chain reaction that includes the elimination of ships from scheduled arrivals, the clustering of ships in ports, terminal congestion and the difficulty of repositioning containers around the world. Furthermore, the transits could be longer in some cases because the tip of Africa often has rough seas and storms
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/attacchi-houthi-logistica-canale-di-suez/ on Thu, 28 Dec 2023 11:31:00 +0000.