Daily Management Review

Industries Most Vulnerable To Disruption From Assaults In The Red Sea


Industries Most Vulnerable To Disruption From Assaults In The Red Sea
Due to continuous attacks in the Red Sea by Iran-backed Houthi terrorists in Yemen, which have impeded the flow of cargo through the vital Suez Canal commerce route, multinational corporations are facing an increase in supply bottlenecks.
In the first obvious indication that the attacks are affecting manufacturing, automakers Tesla, opens new tab; Geely-owned Volvo Car, opens new tab; and Suzuki Motor, opens new tab announced they were stopping part of their production in Europe owing to a scarcity of components.
On January 11, a series of strikes against the Houthi group, which is supported by Iran, were initiated by the United States and Britain.
Due to rising costs for container shipping, some corporations are choosing to reroute their vessels via a lengthier route through southern Africa. This route adds approximately 10 days to the shipping time, costs approximately $1 million in fuel, and may result in product shortages and delays.
S&P Global data revealed that 14.8% of all imports into Europe and the Middle East and North Africa (MENA) come via the Suez Canal route. According to its analysis, the industries most at danger were chemicals, consumer goods, and apparel.
When evaluating industrial and product exposure, S&P Global examines over 6,000 items and over 300 industrial categories. The Suez route is considered as a percentage of all freight in the region; a greater ratio indicates less options from other markets or modes of transportation.
In the meantime, 55.1% of all shipments from Europe/MENA to Asia or the Gulf were made by sea. But just 8.6% of those imports were delivered through the Suez Canal.