Monday, March 4, 2024
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HomeWorldHow have the Red Sea attacks by Yemen's Houthi fighters affected businesses?

How have the Red Sea attacks by Yemen’s Houthi fighters affected businesses?


Attacks on ships by Yemen’s Houthi rebels in the Red Sea have disrupted international trade on the shortest sea route between Europe and Asia.

The attacks, which came in solidarity with Palestinians facing Israeli bombing in Gaza, target a route that accounts for around 15 percent of global shipping traffic, forcing several shipping companies to divert their vessels.

Houthi attacks have forced several commercial vessels passing through the Suez Canal and Bab al-Mandeb Strait to take an alternative and much longer route around South Africa’s Cape of Good Hope, causing major changes and delays.

Here’s a look at the impact the Houthi raids had on major businesses:

Cars

  • Geely: China’s second-largest automaker by sales said on Dec. 22 that its electric vehicle (EV) sales would likely be affected by a delay in deliveries.
  • Michelin: Four factories in Spain owned by the French tire maker stopped production on January 20 and 21 due to delays in the delivery of raw materials.
  • Suzuki: The company’s production plant in Hungary resumed manufacturing on January 22 as planned after a shutdown the previous week due to delays in the arrival of Japanese-made engines. He said shipping routes were changed to go through Africa, which could affect prices.
  • Tesla: The US-based electric vehicle maker will suspend most car production at its factory near Berlin from January 29 to February 11 due to a shortage of components caused by changes in transport routes.
  • Volvo: The Swedish automaker said on Jan. 12 that it would halt production at its Belgian plant for three days due to delays.

Energy

  • PA: The oil company said on December 18 that it had temporarily stopped all transits through the Red Sea.
  • Equinor: The company said on December 18 that it had rerouted ships heading toward the Red Sea.
  • Edison: The CEO of the energy group stated on January 25 that it was beginning to experience a slowdown in the supply of liquefied natural gas (LNG) from Qatar.
  • Qatar Energy: The world’s second-largest LNG exporter has stopped shipping tankers through the Red Sea, although production continues, a senior source with direct knowledge of the matter told the Reuters news agency on January 15.
  • Shell: The British oil major has indefinitely suspended all shipments through the Red Sea, the Wall Street Journal reported on Jan. 16.
  • Valero Energy: The US refiner stated on January 25 that the attacks in the Red Sea caused an increase in crude oil freight rates.

Logistics

  • DHL: The German logistics company, which does not operate ships but uses them to transport containers, on January 8 advised its clients to take a close look at how they manage their inventories.
  • FedEx: The American package delivery giant said on January 14 that it had not seen a big shift towards air freight due to disruptions in the Red Sea.

Retailers

  • Adidas: CEO Bjorn Gulden said on Feb. 1 that shipping disruptions in the Red Sea were negative for gross margins, adding that “explosive” freight rates were driving up costs and shipping delays were causing some delivery problems.
  • Danone: The French food group said in December that most of its shipments had been diverted, increasing transit times. If the situation lasts more than two or three months, Danone will activate mitigation plans, including the use of alternative routes, his spokeswoman said.
  • Ikea: The furniture retailer is sticking to planned price cuts despite rising costs and has enough stock to absorb any hit to the supply chain, it said on Jan. 15.
  • Marks and Spencer: The British retailer’s chief executive said on January 11 that the company expects a slight delay in clothing and home deliveries due to the shipping disruption.
  • Next: The British clothing retailer’s chief executive said on January 4 that sales growth would likely moderate if disruptions continued into 2024.
  • peco: The owner of Poundland warned on January 18 that its supply could be affected in the coming months if disruptions continue.
  • Primark: The chief financial officer of Associated British Foods said on January 23 that Primark is coping with the disruption by adjusting lead times and stock flow.

Interactive_RedSea_attacks_Houthis

  • Sainsbury’s: “We are making sure to plan product sequencing from Asia Pacific so we can get products in the right order,” the company’s CEO said, adding that long-term contracts with shippers “mitigate any impact on shipments.” costs as much as possible. .
  • Aim: The U.S. retailer is experiencing some disruptions to shipments from India and Pakistan, a source familiar with the matter said Jan. 12, calling the effect “minor” overall.
  • Tractor supply: Deliveries for the US retailer have been delayed by between two and more than 20 days, the company’s top supply chain operator said on January 12.
  • Williams-Sonoma: The owner of Pottery Barn is diverting shipments and has been working on contingency plans, its CEO told CNBC on Jan. 24.

Others

  • BHP Group: The Australian mining giant said on January 25 that the disruptions were forcing some of its cargo service providers to take alternative routes, such as around the Cape of Good Hope in Africa.
  • Electrolux: The Swedish appliance maker has created a working group to find alternative routes or identify priority deliveries to try to avoid disruptions. On February 2, its CEO said costs related to developments in the Red Sea were manageable. “If the situation continues, I am more concerned about higher costs than the risk of having to stop production,” he added.
  • Essence: The maker of brands such as Libresse and TENA said it would stay in touch with affected suppliers to ensure the continued flow of products. On Jan. 25, its CEO said he saw a negative impact on its freight costs, but could not specify what that impact would amount to.
  • Evonik: The specialty chemicals maker said it was being hit by “delays and short-notice rerouting” and was trying to mitigate the impact by placing orders earlier and switching to air freight where possible.
  • Gechem GmbH & Co. KG: The German chemicals maker said it had reduced production of dishwasher and toilet tablets as a result of the delays.
  • Kon: The Finnish elevator maker said the situation may delay shipments in some cases, but that most deliveries to its customers should remain on schedule. Kone said it had prepared for disruptions by seeking alternative delivery methods and routes.
  • Levi Strauss and company: The denim maker is experiencing delays of 10 to 14 days in transit times as a result of continued disruptions to shipping across the Red Sea. It has diverted some U.S. shipping to the west coast, avoiding the Red Sea and the Suez Canal.
  • Logitech: The chief executive of the computer peripheral maker said on January 23 that profit margins will be affected by higher transportation costs due to the Red Sea crisis.




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