Delays and disruption are expected to extend to the Christmas supply chain season as Houthi attacks continue. Businesses are advised to review their supply chain planning early to meet deadlines.
Vessels continue to use the Cape of Good Hope as an alternative global shipping route in light of Red Sea disruptions.
Shipping lines are re-routing towards the Cape of Good Hope and will continue to do so until the Red Sea becomes safe to transport goods again. Due to the ongoing conflict in the waters, commercial vessels are being forced to take longer routes to avoid disruption.
As uncertainty continues in the pivotal maritime straits, shipping firms have re-routed their sea freight cargo ships away from the Suez Canal, previously responsible for transiting 30% of the global container trade, towards the Cape of Good Hope.
The campaign of attacks beginning in November has created immediate impacts for supply chains across the globe. For supply chains and ocean freight service providers, the impact of the conflict has come in the form of increased fuel consumption and ever growing costs. Delivery times of shipments are also likely to remain longer than usual as companies navigate the safest and most efficient ways to transport their goods.
Prior to the conflicts, the Suez Canal hosted 12% of all sea trade and had a 30% share of container vessels. As a result of Houthi control in the waters there is now a higher demand for export containers as port congestion soares, and as other routes remain suspended, inventory has got stuck in ports.
A number of manufacturers either sourcing from or exporting to Asia and Africa have also been affected by delays.
Recent Israeli airstrikes above the waters on the Houthi- controlled Red Sea port in Hodeidah, Yemen have led to further maritime issues. Direct responses from Israel are now underway as Hodeidah oil storage facilities are being targeted as well as a nearby power plant.
A challenging few months are to be expected for supply chain businesses whilst conflict remains ongoing, and we urge you to plan ahead. Delays and disruption are expected to extend to the Christmas supply chain season, so please see below our guidance:
At Woodland Group, we advise that any products required for 2024 Christmas sales, transported via shipping lines, are to be sailed in the weeks prior to The Golden Week holidays in China. We recommend transportation in weeks 39/40. This will allow longer transit times for vessels sailing via the Cape of Good Hope instead of through the Red Sea and Suez Canal.
A two week turnaround period can thus be achieved through supply chain warehouses meaning that your products should safely reach the shops by early December. Woodland Group aims to provide full visibility to its customers and partners and advises careful consideration from your business whether the two week timeline is feasible, if not we suggest earlier departure dates.
This article provided by Woodland Group, Full Trading members of IIFA.
