Exporters are exploring air freight options as chaos in the Red Sea worsens

Exporters are scrambling to find alternative ways, whether by air, land or sea, to deliver key consumer goods and auto parts to retailers, as a series of attacks in the Red Sea exacerbate problems in shipping supply chains around the world.

The Yemeni Ansar Allah group has intensified its attacks on ships in the Red Sea since November 19 to show support for Hamas as the Israeli military offensive in Gaza continues.

The attacks disrupted a major trade route linking Europe and North America to Asia via the Suez Canal, and container shipping costs rose to more than triple in some cases as companies sought to transport their goods via alternative, often longer, sea routes.

Standard & Poor’s Global said in a report that if there are prolonged disruptions, the consumer goods sector, which supplies the world’s largest retail companies such as Walmart and Target, will face the greatest impact.

Alan Baer, ​​CEO of OL USA, indicated that he has teams advising shipping and logistics clients to prepare for disturbances in the Red Sea that could extend for at least ninety days.

“The arrival of the Christmas holiday does not make a difference,” Bayer said.

“We’ll have a calm period between now and January 2, and then everyone will get nervous”.

Jan Klein Lasthuis, chief operating officer for air freight at leading German shipping company Hellmann Worldwide Logistics, said that companies are now trying to switch to so-called multimodal transportation to maintain global supply chains, which includes a common sea and air route.

He added that Hellman has seen an increase in demand on the combined air and sea route for consumer goods such as clothing as well as electronics and technical materials.

This may mean, for example, that the goods are first transported by sea to a port in Dubai, and from there they are transported by air freight.

“This alternative route allows customers to avoid the danger zone in the Red Sea and the long journey around the southern tip of Africa,” Klein Lasthuis said.

Some companies may choose to use air freight for particularly urgent or critical goods, but the cost means it’s not a comprehensive solution, said Paul Brashear, a sector vice president at supply chain group ITS Logistics.

According to Corey Ranslem, CEO of British maritime risk and security consultancy Dryad Global, said that about 35,000 ships sail through the Red Sea region annually and transport goods between Europe, the Middle East and Asia, which represents about 10% of the global gross domestic product.

Retail companies in the United States rely on this route to obtain goods such as cotton sheets and electric toothbrushes from India and shoes from China and Sri Lanka.

He continued, “In light of an extended threat, the prices of fuel and goods heading to Europe will rise significantly due to increased transfer costs around Africa, which could add about 30 days to transit depending on the port of arrival”.

At the same time, owners of large container ships began adding fees to shipments passing through the Red Sea.

In a notice to customers on Wednesday, French shipping group CMA CGM said it would impose additional fees of $1,575 per 20-foot container, $2,700 per 40-foot container, and $3,000 for containers equipped with refrigerants and special equipment.

Tailwind Shipping Lines, a subsidiary of the German supermarket chain Lidl, which transports non-food goods for Lidl as well as goods for other customers, said it is currently taking the Cape of Good Hope route.

“Our goal is to stay as close to our schedule as possible,” the Group added.

Shipping companies are still ignorant of many matters related to the new international maritime alliance that the United States is working to form to achieve stability in the region.

A source in the Spanish fashion industry told Reuters that shipping lines are telling customers that a lot depends on the US-led task force and whether it can prevent further attacks and make the route safe again.

The industrial source explained that it is important for European companies to be able to use the Suez Canal again to ensure clothing supplies from Asia.

The Panama Canal is suffering from severe drought, which has reduced the number of ship passages it allows.

In addition, there is a race to transport goods before factories close for the Chinese New Year from February 10 to 17, which could disrupt supplies for a month or more.