Red Sea Crisis Adds Costs, Causes Delays For Suppliers

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  • Toymaker Basic Fun’s team that oversees ocean shipments of Tonka trucks and Care Bears for Walmart is racing to reroute cargo away from the Suez Canal following Red sea crisis.
  • The costs for certain China-UK freight have more than quadrupled to roughly US $ 4,400 per container since the Israel-Hamas war began.
  • Approximately 20% of the worldwide container fleet, or 364 behemoth container boats capable of transporting just over 2.5 million full-sized containers, have been rerouted as a result of the Red Sea attacks.

Suppliers for the likes of IKEA, Home Depot, Amazon and retailers around the world are rerouting cargo away from the Suez Canal following militant attacks on vessels in the Red Sea, as businesses grapple with the biggest shipping upheaval since the COVID-19 pandemic threw global supply chains into disarray, reports Reuters.

The commercial route gets used by almost a third of the world’s container ships, and redirecting ships across the southern point of Africa will likely require up to US $ 1 million more in gasoline for each round journey between Asia and Northern Europe.

Red Sea crisis

Yemeni Houthis’ Red Sea drone and missile attacks, aimed at showing their backing of Palestinian Islamist group Hamas, struggling against Israel in Gaza, have thrown shipping plans around the region into chaos.

Jay Foreman, CEO of Florida-based toymaker Basic Fun says all toys envisioned for Europe are frequently transported via the Suez Canal, since it’s the fastest way to transfer items between the two countries. The costs for certain China-UK freight have more than quadrupled to roughly US $ 4,400 per container since the Israel-Hamas war began in October.

The company is also sending some commodities from the Suez Canal to the drought-stricken Panama Canal, while other shipments are diverted to the West Coast via a direct path over the Pacific Ocean.

Suez Canal situation is shifting

The Suez Canal situation is rapidly shifting, and exporters Maersk and CMA CGM have resumed travel over the Red Sea with military escorts. According to Michael Aldwell, executive vice president of sea logistics at Switzerland’s Kuehne+ Nagel, the primary effect would most likely be felt in the following six weeks.

As per the data revealed from Kuehne + Nagel, approximately 20% of the worldwide container fleet, or 364 behemoth container boats capable of transporting just over 2.5 million full-sized containers, have been rerouted as a result of the Red Sea attacks.

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Source: Reuters

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