Ikea warns of possible shortages of some of its products as shipping companies avoid the Red Sea, one of the world's busiest trade routes, due toin the region.
Several large container carriers are diverting shipments from a key waterway leading to the Suez Canal due to a series of attacks on ships byhis , according to data from the freight transport platform Freightos. The Iran-backed Houthis vowed last month to attack ships they suspect have ties to Israel in a show of support for Hamas, the Gaza-based militia that has been at war with Israel since its in the country.
“The situation in the Suez Canal will cause delays and may cause availability limitations for certain IKEA products,” the Swedish furniture retailer's parent company, Inter IKEA Group, told CBS MoneyWatch on Thursday.
The company said it is evaluating its options to ensure the availability of its products. Ikea does not own any container ships and its shipping partners handle all of the company's shipments, a representative of the Inter IKEA Group said.
More than 20 ships have been attacked in the Red Sea since mid-November, according to Zev Faintuch, senior intelligence analyst at global security firm Global Guardian. As a result, 19% of cargo is being diverted from the Suez Canal, the shortest trade route between Europe and Asia, according to the Freights Baltic Index.
In recent weeks, shipping giants such as CMA CGA, Equinor, Evergreen, Hapag-Lloyd, Maersk, Orient Overseas and ZIM have said they plan to avoid the Red Sea as long as violence persists, and energy company BP said Monday it has suspended oil and gas shipments in the area.
Before the recent wave of attacks in the region, 12% of world trade passed through the Suez Canal, according to the United States Naval Institute.
Diverted shipments will now pass through an alternative route along the southern tip of Africa, adding days or weeks to shippers' journeys. Shipping costs have risen 14% since cargo shippers were diverted around the Suez Canal due to the increased risk of attacks, according to Freightos data.
“The impact of trade deviations will be quite dramatic… (resulting in) longer delivery times and higher costs until safety is restored,” Freightos chief marketing officer Eytan Buchman told CBS MoneyWatch .
Other retailers are also taking steps to protect their supply chains amid the threat to ships in the Red Sea. For example, clothing retailer Abercrombie & Fitch Co. is planning to switch to air freight to secure its supplies and avoid delays, Bloomberg reported Thursday.
Meanwhile, efforts are underway to improve security in the region. The United States is forming a 10-nation coalition to quell Houthi attacks in the Red Sea, US Defense Secretary Lloyd J. Austin III said. saying Monday in a statement.
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