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Shipments to the US Disrupted Due to Red Sea Crisis

red sea crisis

A lot of retailers in the US are facing shortage of stocks because of disruptions in the Red Sea.

Attack on vessels in the Red Sea by the Iran-backed Houthi militia have disrupted trade on one of the world’s most important shipping routes, adding between 10 and 15 days to transit times as ships take the safer route around southern Africa.

Many retailers around the globe are stocking up on goods and seeking air or rail alternatives in a bid to avoid empty shelves during spring.

While the Suez disruptions mainly affect Asia-to-Europe trade, about 30% of shipments to the U.S. East Coast go through the canal.

U.S. retailer Target is experiencing some disruptions of shipments from India and Pakistandue to the crisis in the Red Sea. The company has faced delays in receiving some shipments, in line with the extended transit times that vessel operators are seeing, as it works with its shippers to redirect merchandise around the Suez Canal. It has resulted in extra time and costs associated with re-routing were expected to be minimal.

Target gets garments, plastic, toys and bath products among other things from suppliers in India and Pakistan, which are important sources for the U.S. retailer, according to its global factory list. These products are typically shipped through the Suez Canal.Most of Target’s products, however, come from China and are shipped directly across the Pacific Ocean to West Coast ports, unaffected by the disruptions in the Middle East.

The United States and Britain launched a series of strikes on Yemen on Jan. 11 aimed at the Iran-backed Houthi militia. Container shipping prices have risen and companies are rerouting vessels via a much longer southern Africa route that adds about 10 days to shipping, about $1 million in fuel and could potentially create product shortages and delays.

Data from S&P Global showed the Suez Canal route accounts for 14.8% of all Europe and Middle East and North Africa (MENA) imports. Its analysis showed consumer goods, clothing and chemicals were among the sectors at most risk.

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