Giants Have Announced: Suspension Of Production! Red Sea Crisis Impacts Beyond The Early Stages Of The Epidemic!

 

According to a report on Russia Today's website on the 20th, Sea-Intelligence, a well-known maritime consulting organization, recently said that the current disruption of the Red Sea shipping routes has caused greater damage to the global supply chain compared to the early stages of the new crown epidemic.

 

A report by Sea-Intelligence said that the current drop in vessel capacity is the second largest in recent years. A more significant event was the six-day "blockage of the century" in the Suez Canal, caused by the grounding of the mega-cargo ship Chang Chi, which brought trade to a standstill at a cost of $9 billion a day.

Sea-Intelligence estimates that about 10 percent of the world's fleet is currently idle. According to the report, the current delays could be offset if ocean carriers deployed additional vessels.

 

 

 

So far, a number of companies have claimed that delays in container ships have hit the company's supply chain. Tesla, Volvo, and Michelin recently said that some of their factories have been forced to suspend production. Global home furnishing giant Ikea has said that some of the company's products may experience delivery delays.

 

Notably, a number of automotive plants have halted production in recent times due to problems with the transportation of parts. Among them is Japan's Suzuki Motor's only European plant in Hungary, which will shut down production for a week. Earlier, Tesla announced it would suspend production of most of its cars at its plant near Berlin between Jan. 29 and Feb. 11, and Volvo Cars announced last week that production at the company's plant in Ghent, Belgium, would be suspended for three days.

 

The suspension of production at the European factories of these well-known car companies is due to the delay caused by the shipping company that delivers spare parts, avoiding the Red Sea and bypassing the Cape of Good Hope in South Africa. In order to avoid production stoppages, Volkswagen has adjusted the supply route of parts from last month onwards from the Suez Canal to the Cape of Good Hope detour, a move that increased the delivery time by two weeks.

 

The trade in auto parts between Asia and Europe is not trivial. Currently, about 70% of the European auto industry's parts are transported from Asia through the Red Sea.

 

Global home furnishing giant Ikea previously warned that some of the company's products could experience delivery delays due to Houthi attacks on ships traveling to the Suez Canal. "The situation in the Suez Canal will lead to delays and may result in limited availability of certain IKEA products." The company said it was in dialogue with transportation providers to ensure that shipments could proceed safely.

 

Ikea also said it is evaluating other supply route options to ensure its products can be delivered to customers. Many of the company's products typically travel through the Red Sea and the Suez Canal to get from its factories in Asia to Europe and other markets.

The overall impact of the Red Sea conflict on the global supply chain continues and has already had a significant knock-on effect, with logistics markets expected to take a long time to return to a predictable cycle, according to a customer notification issued by Robin Rise International Freight Forwarding regarding the situation in the Red Sea and the restrictions on transportation through the Suez Canal. The company also said that in order to secure space in the highly competitive capacity market, shippers are advised to book space at least 3–4 weeks in advance.

 

 

 

Data released by Container xChange last week showed that 500 of the 700 container ships scheduled to cross the Red Sea have been diverted.

Separately, the latest data from Clarksons showed that vessel traffic (in gross tons) in the Red Sea region fell by 10% from January 12–16, and vessels entering the Gulf of Aden region during the same period declined significantly by 65% compared to the 2023 average, with tanker and gas carrier traffic significantly lower and container ship traffic continuing to remain low, falling by about 90% in terms of TEUs.

 

As for the Suez Canal, total ship traffic in the Suez Canal from January 12–15 decreased by 53% compared to the first half of December and by 45% at the beginning of January, and the decrease is expected to continue in the coming days.

The Red Sea crisis has not yet eased, despite multiple efforts. Shipping companies have yet to regain confidence in returning to the Red Sea route amid escalating confrontation.

 

A report released by the Shanghai International Shipping Research Center pointed out that according to the analysis of the Port and Shipping Big Data Lab, ship passage through the Suez Canal and the Bab-el-Mandeb Straits slipped by 22.5% and 25.3%, respectively, in December compared to November, but the passage of Chinese vessels was basically stable. The Chinese-funded head ships involved in the waters, COSCO Shipping Container & Bulk, Intercontinental Shipping, China Valley Shipping, and China United Shipping, did not divert or stop their voyages.