The first impact of the military escalation in the Red Sea between Westerners and Yemen’s Houthis is being felt on industrial activities in Europe, and first of all on the automobile sector. Thus, Tesla announced on Thursday January 11 that it will suspend the production of electric vehicles at its German factory between January 29 and February 11, due to a shortage of components manufactured in Asia. “Significant increase in transportation time is creating a gap in supply chains”The American manufacturer explains.
The next day, Swedish Volvo, owned by Chinese Geely, announced a three-day shutdown at its Belgian factory in Ghent the week of January 15 due to a gearbox shortage. Geely, like furniture maker Ikea, warned its customers about delivery delays. Longer delivery times and potential port congestion will penalize other companies further down the supply chain.
Since November 2023, the US Central Command in the Middle East has recorded 27 attacks by drones, missiles and ballistic missiles. Fewer and fewer ships are using the Red Sea and the Suez Canal, which typically sees 12% of international trade and a good share of containers bound for Europe.
“Inflationary Pressure”
The four major European shipowners (MSC, Maersk, CMA CGM and Hapag-Lloyd), which provide 53% of global transport by “box”, are now avoiding the perilous Bab al-Mandab Strait, at the entrance to the Red Sea, and the Cape of Divert their container ships through the Good Hope. By the end of November twice as many ships are crossing the tip of Africa, extending the Asia-Europe journey by 13,000 kilometers and ten days. Many consignments will take longer to unload in Rotterdam (Netherlands), Antwerp (Belgium), Marseille (Boches-du-Rhône) or Genoa (Italy).
Now, 90% of container ships avoid the Isthmus of Egypt, according to Clarkson Research Services, a subsidiary of the world’s largest shipping broker. This diversion caused a 40% reduction in revenue for Egypt, which owns the canal. The crisis led to a decline in trade flows, which was estimated by the Institute of World Economy in Kiel (Germany) to be -1.3% globally between November and December 2023, and reached 2% and 3%, respectively. .1% for exports and imports between Asia and Europe.
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