Affected by this situation, industry giants have announced: suspend production!

According to a report on Russia Today on the 20th, the well-known maritime consulting firm Sea-Intelligence recently stated that compared with the early days of the COVID-19 pandemic, the current disruption of the Red Sea route has caused greater damage to the global supply chain.

A report from Sea-Intelligence stated that the current decline in ship capacity is the second largest decline in recent years. An event with a greater impact was the grounding of the ultra-large cargo ship "Ever Given", which caused the Suez Canal to be blocked for 6 days. At that time, the loss of trade stagnation reached US$9 billion per day.

According to Sea-Intelligence, about 10% of the global fleet is currently idle. The report said that if ocean carriers deploy additional ships, they can be used to offset current delays.

Giants have announced: Suspend production!

So far, some companies have claimed that container ship delays have hit their supply chains. Tesla, Volvo and Michelin said some of their factories have been forced to suspend production. Global home furnishing giant IKEA said that some of its products may be delayed in delivery.

It is worth noting that in recent times, many automobile factories have stopped production due to parts transportation problems. Among them, a European factory of Japan's Suzuki Motor in Hungary will stop production for a week. Earlier, Tesla announced that it would suspend most of its car production at its factory near Berlin from January 29 to February 11, and Volvo Cars announced last week that its factory in Ghent, Belgium would suspend production for three days.

The suspension of production at the European factories of many well-known automakers mentioned above was due to the delay caused by the shipping companies that transported spare parts avoiding the Red Sea and bypassing the Cape of Good Hope in South Africa. To avoid production suspension, Volkswagen adjusted the supply route of parts, turning from the Suez Canal to the Cape of Good Hope last month, which increased delivery time by two weeks.

The trade of auto parts between Asia and Europe is significant. Currently, about 70% of the parts for the European automotive industry are shipped from Asia via the Red Sea.

Global home furnishing giant IKEA previously warned that some of its products may be delayed in delivery due to attacks by the Houthi armed forces on ships heading to the Suez Canal. "The situation in the Suez Canal will cause delays and may result in limited supply of some IKEA products." The company said it is in dialogue with transportation suppliers to ensure that goods can be carried out safely.

IKEA also said it is evaluating other supply route options to ensure its products can be delivered to customers. Many of the company's products are usually shipped from factories in Asia to Europe and other markets through the Red Sea and the Suez Canal.

The "Customer Notice on the Situation in the Red Sea and Restricted Transportation in the Suez Canal" issued by Robinson International Freight Company shows that the overall impact of the Red Sea conflict on the global supply chain continues and has brought obvious chain effects. It is expected that it will take a long time for the logistics market to return to a predictable cycle. The company also stated that in order to obtain space in the highly competitive capacity market, it is recommended that shippers book space at least 3-4 weeks in advance.

Ships diverted, Chinese-funded ship companies maintained stable navigation

Data released by Container xChange last week showed that 500 of the 700 container ships that planned to cross the Red Sea had changed their routes.

In addition, new data from Clarksons showed that the volume of ships passing through the Red Sea (in gross tonnage) fell by 10% from January 12 to 16, and the number of ships entering the Gulf of Aden during the same period fell by 65% compared with the average level in 2023. Among them, the volume of oil tankers and gas tankers decreased significantly, and the volume of container ships continued to remain low, with a decrease of about 90% in TEU.

As for the Suez Canal, the total volume of ships passing through the Suez Canal from January 12 to 15 decreased by 53% compared with the first half of December, and by 45% in early January. It is expected that the decline will continue to expand in the next few days.

Despite the efforts of many parties, the Red Sea crisis has not eased. In the case of escalating confrontation, shipping companies have not yet regained confidence in returning to the Red Sea route.

A report released by the Shanghai International Shipping Research Center pointed out that according to the analysis of the Port and Shipping Big Data Laboratory, the number of ships passing through the Suez Canal and the Bab el-Mandeb Strait in December decreased by 22.5% and 25.3% respectively compared with November, but the number of Chinese-funded ships passing was basically stable. The leading Chinese-owned fleets involved in the waters, including COSCO Shipping Container and Bulk Shipping, Intercontinental Shipping, China Grain Shipping, and China United Shipping, have not changed routes or stopped sailing.

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