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Abercrombie & Fitch and Ikea impacted by Red Sea shipping crisis

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American lifestyle retailer Abercrombie & Fitch and Swedish furniture giant Ikea are both facing supply chain issues due to security concerns just south of the Suez Canal.

More than 100 container ships have been rerouted around southern Africa to avoid attacks by Houthi rebels on the western coast of Yemen.

Ikea is currently looking for other options to secure product availability, many of which normally pass through the Red Sea and the Suez Canal from factories in Asia to Europe and other markets.

A spokesman for the wider Inter Ikea Group stressed it was working “to ensure the safety of people working in the Ikea value chain and to take all the necessary precautions to keep them safe”.

While, Abercrombie is looking to switch sea freight for air wherever possible to avoid disruptions, according to an email to suppliers seen by Bloomberg News.

Several shipping companies have diverted to avoid the 120-mile canal, which is the quickest sea route between Asia and Europe. Around 12% of global trade passes through the Red Sea, including 30% of global container traffic.

Since November, the rebels have increased attacks on vessels following the Israel’s bombardment of Gaza. Warships from the UK, France and the US have shot down Houthi drones and missiles. The US has also assembled a coalition of countries to carry out patrols in the southern Red Sea to try to safeguard vessels against attacks.

This news has been welcomed by Logistics UK. Nichola Mallon, head of trade, said: “The withdrawal of north-bound services from the Red Sea/Suez Canal route will mean their diversion via the Cape of Good Hope adding about 10 days to transit times and estimated arrival dates in North Europe and Mediterranean ports.

“With this diversion and delay comes additional costs. Any prolonged closure will add to the costs of goods, already under pressure from the effects of wider inflation, especially if flows of oil and natural gas are affected.

“This serious situation predominantly affects ships serving the Asia to North Europe and Mediterranean routes, however there could be knock-on effects in other regions if the situation escalates or lasts for a prolonged period. This interruption to global shipping also comes at a time when there are already significant challenges to movement through the Panama Canal because of drought.

“Logistics UK welcomes that a number of national governments are working to secure the safe passage of essential trade in international waters and protect the safety of crew, the free passage of ships and the continued functioning of this key international trade route. Meanwhile, logistics is a flexible and adaptable industry, which is already working to identify alternative routes to deliver goods to and from the UK.”

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