Electrolux, a world-leading appliance maker based in Sweden, has reportedly established a task force to explore alternative routes and identify priority deliveries, joining other companies in the race to avert disruptions caused by attacks from the Yemeni Houthi group on ships in the Red Sea.
The company, which collaborates with shipping companies like Maersk and CMA, announced on Monday that it is considering measures to mitigate potential impacts on deliveries. Recent attacks have already compelled major shipping companies, including Maersk, to reroute around the Cape of Good Hope, bypassing the Suez Canal.
The Suez Canal, responsible for about 12 percent of global shipping traffic, has become a focal point due to geopolitical tensions and security concerns in the region. Defence Secretary Lloyd Austin stated on Tuesday that the United States is leading a multinational operation to safeguard commerce in the Red Sea.
While memories of the 2021 Ever Given incident causing a six-day blockage in the Suez Canal linger, industry experts believe that, with more container shipping capacity available, the impact won’t be as severe. However, they anticipate a rise in freight rates, with the longer trip costing up to an extra $1 million in fuel for each round trip between Asia and Northern Europe, according to estimates from freight platform Xeneta.
Retailers and manufacturers are likely to pass on these higher costs to consumers, potentially contributing to inflation during an extended cost-of-living crisis. Although delays are not expected to affect Christmas holiday shopping, their are warnings of potential stock shortages in shops by February if the delays persist.
The alternative route via southern Africa adds approximately 10 days to the journey from Asia to North Europe and the East Mediterranean. United States fertiliser company Mosaic and dairy giant Danone are among the companies already rerouting shipments around the Cape of Good Hope, with Danone indicating that if the situation persists, it will activate mitigation plans, including exploring alternate sea or road routes wherever possible.
