Ikea has reported that there will be product delays resulting from recent rebel attacks on ships navigating the Bab al-Mandab Strait and the Suez Canal, both of which are part of the key Red Sea trade route. Houthi militants in Yemen have increased attacks on foreign-owned vessels since the Israel-Hamas war in October, using drones and rockets. They have forced companies to reroute their cargo around Africa’s Cape of Good Hope, adding several days to their journeys. Ikea has stated that the situation in the Suez Canal could cause availability constraints for certain Ikea products and result in product delays. The furniture giant is constantly searching for other options to ensure a steady supply of products to its customers.
According to Project 44, avoiding the Suez Canal will add as much as 10 days to shipping routes, thereby causing product shortages on shelves by February. Longer journeys will incur higher shipping costs which could potentially have an impact on consumer prices. Shipping analysts Xeneta have estimated that each journey between Asia and Northern Europe could cost an additional $1 million, a cost which would be eventually passed on to consumers purchasing those goods.
Other brands are also keeping a close watch on the region. Electrolux has set up a taskforce with its carriers to look at measures including rerouting, identifying time-sensitive deliveries, and finding alternative routes if necessary. The company stated that it expected any knock-on effect on deliveries to be limited. Dairy giant Danone stated that it was working with suppliers and partners to closely monitor the situation.
The US has launched an international naval operation to safeguard ships navigating the Red Sea route. Countries including the UK, Canada, France, Bahrain, Norway, and Spain have joined them. Shipping firms have welcomed the plans but can not confirm when it will be safe to resume using the Red Sea, which might mean that disruptions continue for some time. The long-term impact could be an increase in shipping costs, causing prices paid by consumers to rise
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