Global home furnishing giant IKEA has warned that some of its products may experience delivery delays due to Houthi armed forces' attacks on ships heading to the Suez Canal. "The situation in the Suez Canal will cause delays and may result in supply constraints for certain IKEA products," an IKEA spokesperson said. The company said it was in dialogue with shipping providers to ensure shipments can proceed safely.
IKEA also said it was evaluating other supply route options to ensure its products can be delivered to customers. Many of the company's products typically travel through the Red Sea and Suez Canal from factories in Asia to Europe and other markets.
Supply chain research firm Project44 said avoiding the Suez Canal would extend shipping times by 7-10 days and could see stores running short of inventory by February.
In addition to product delays, longer journeys will increase shipping costs, which may have an impact on prices. Shipping analytics firm Xeneta estimates each voyage between Asia and Northern Europe could cost an extra $1 million after the rerouting. This cost will ultimately be passed on to consumers who purchase the goods.
The Red Sea crisis is getting worse
The Red Sea is one of the world's most important maritime trade routes. Since the conflict between Israel and Hamas broke out in October, the Iran-backed Houthis have been stepping up attacks on commercial shipping in the Red Sea, targeting vessels with ties to Israel. This has forced some companies to reroute their freight to avoid the attacks.
At present, the Red Sea crisis is getting worse. The attack prompted the United States to launch an international naval operation to protect ships on Red Sea shipping lanes, joined by countries including Britain, Canada, France, Bahrain, Norway and Spain.
However, the Houthis responded strongly that they would continue to attack ships related to Israel. If the United States targets them, they will also attack U.S. warships with missiles and drones.
Other brands are also paying close attention to the situation
Some other brands are also paying close attention to the impact the situation in the Red Sea may have on their supply chains.
Swedish appliance maker Electrolux has set up a task force with its carriers to study a range of measures, including finding alternative routes or prioritizing deliveries. However, the company expects any impact on deliveries to be limited.
Dairy company Danone said it was closely monitoring the situation in the Red Sea together with its suppliers and partners.
American clothing retailer Abercrombie & Fitch Co. The plan is to switch to air freight to avoid problems. The company said the Red Sea route to the Suez Canal is important to its business because all its cargo from India, Sri Lanka and Bangladesh takes this route to the United States.