The Red Sea crisis stirs up the nerves of e-commerce companies. Liu Shuohu, vice president of logistics supply chain of DHgate Group, told China Business News that the Red Sea crisis is one of a series of major events that have affected the global supply chain pattern in recent years. Liu Shuohu said that in recent years, geopolitical conflicts and other uncertain factors have emerged one after another, posing major challenges to cross-border e-commerce and supply chain operations. They have not only pushed up the logistics operating costs of overseas merchants, reduced the efficiency of the supply chain, caused greater uncertainty in customer experience, and may even become a fatal black swan event for overseas enterprises.
Roger, an American line expert who has been working as a freight forwarder in California for many years, told China Business News that different types of e-commerce are affected to different extents. For example, some e-commerce companies that specialize in clothing, etc., mainly sell small parcels and can be transported by air. They will not be affected by the Red Sea crisis. However, some e-commerce companies that use fast ships attach great importance to timeliness. "Their trading methods determine that the goods cannot wait and must be transferred."
Regarding how to "break the situation", Liu Shuohu gave the answer:
As Roger said, whether cross-border e-commerce is affected depends on the category.
If we take import as an example, China's current cross-border e-commerce import sources are mainly from Europe, the United States, Japan, South Korea and Southeast Asia. Among them, the Red Sea crisis has affected merchants importing from Europe. However, if the price of the category is high, such as imported health food and alcohol, air transport is the main method. The Red Sea crisis will have little direct impact on such cross-border e-commerce importers. However, many economists interviewed by China Business News believe that if the Red Sea crisis continues for a long time, its indirect impact will still disrupt all aspects of international logistics and supply chain prices.
BenMay, director of global macroeconomic research at Oxford Economics, told China Business News that the Red Sea crisis will have an impact on some companies and industries in the short term, but these impacts are not enough to cause any meaningful changes in the economy or inflation baseline forecasts. "The key question is how fast shipping companies can resume sailing in the Red Sea," he said.
Roger told reporters that traditional foreign trade merchants still have room to wait for the current crisis, but e-commerce delivery time is shorter and may be delivered in 20 days. Unless the seller's inventory in the United States is high enough, he can still wait. If it is bulk goods, retailers in the United States have very little inventory. In this case, they cannot wait. Faced with the current freight prices, they can only accept the slaughter.
Liu Shuohu said that major events such as the Red Sea crisis have seriously affected cross-border e-commerce customers and consumer experience, resulting in stagnant logistics tracking and significant delays in arrival time. Overseas companies need to respond quickly, identify affected orders and customers, and provide timely follow-up and comfort. For customers who have not placed orders, there must be corresponding timeliness reminders and estimates to give customers reassurance to the greatest extent possible.
Liu Shuohu said that Dunhuang.com uses the United States as its main market. So far, the supply chain risks caused by the Red Sea crisis have had relatively little impact on the overall platform.
"But indeed, we have also observed that shipping prices in the U.S. direction have also risen sharply. The freight rate per container on the U.S. East Route has increased from $3,950 to $6,860, and the U.S. West Route has increased from $2,800 to $4,515." He said.
Liu Shuohu said that in this case, as a platform, its advantage is that it has accumulated enough logistics resources for scheduling and routing. By connecting different logistics resources in various segments, it can provide platform merchants with complete full-link solutions and save costs as much as possible while ensuring timeliness.
Roger explained to reporters that the most direct impact is on the eastern United States. The US-Eastern route that originally switched to the Suez Canal to avoid the blockage of the Panama Canal now either detours around the Cape of Good Hope or returns to the Panama Canal and queues for passage. The result is the same: a reduction in effective shipping capacity.
In this case, the ones most affected are actually the shippers (including e-commerce companies) who have prepaid freight terms and the American consignees who do not have an agreed price. Roger said it also depends on how long the cargo owner's existing inventory in the United States can sustain shipments.
Liu Shuohu told China Business News that from the perspective of supply chain risk management, the core concerns and response measures of overseas companies mainly include two aspects. One is to control costs, and the other is to ensure experience.
Liu Shuohu said that major events, including the Red Sea crisis, often first impact the international logistics and transportation links, causing sea and air transportation prices to rise sharply.
He said that in the face of increasing costs, overseas companies need to accumulate enough logistics resources for scheduling and routing, and the team must be able to connect different logistics resources to form a full-link solution, and select the optimal cost for end-to-end fulfillment while ensuring timeliness.
Liu Shuohu said: "In order to ensure the safety of goods and the stability of the supply chain, we recommend that European line goods can be transported by rail, and we recommend that customers choose the West American route for U.S. line goods. Overall, the timeliness of the sea freight routes currently provided by DHgate Group is still stable, and the overall price has increased by about 20% in line with market conditions."
Liu Shuohu also gave an example. Recently, a merchant on the platform had a batch of goods bound for Germany that was blocked due to the Red Sea issue. With the help of the platform, they immediately "replaced" the China-Europe Railway and continued to fulfill the contract by land transportation. The final timeliness was almost the same, and the price was slightly 10% more expensive than the previous seller's shipping by sea. "But the certainty and the range of logistics transportable categories have expanded compared with sea shipping, and the seller is also very satisfied with this." He said.
There are currently two traditional routes from Asia to Nordic ports, namely via the Suez Canal and via the Cape of Good Hope to Nordic ports. Due to economic reasons, before the Red Sea crisis, most of them chose to reach Europe via the Suez Canal route.
However, if the Red Sea crisis continues, most container ships may choose to go around the Cape of Good Hope instead of reaching Northern Europe through the Suez Canal. This will increase the shipping distance by 30% compared to the most economical route to the Nordic ports, which will have an impact on freight rates from the cost side, and the time cost will also increase by at least 10 days.
Clarkson Research estimates that the deviation will bring an additional 2% growth to global seaborne ton-mile trade volume. In its "baseline scenario" forecast, Clarkson Research believes that the impact on the container ship and car carrier markets will be greater; the impact on gas carriers and bulk carriers will be less. Under the "extreme scenario" forecast, that is, when 90% of ships will divert to the Red Sea, global seaborne ton-mile trade will increase by about 6%, which is more than double the forecast value of the "baseline scenario".