Red Sea shipping workarounds add costs, delays for suppliers, retailers
By Lisa Baertlein
LOS ANGELES (Reuters) — Toymaker Basic Fun's team that oversees ocean shipments of Tonka trucks and Care Bears for Walmart (NYSE:WMT) and other retailers is racing to reroute cargo away from the Suez Canal following militant attacks on vessels in the Red Sea.
Suppliers for the likes of IKEA, Home Depot (NYSE:HD), Amazon (NASDAQ:AMZN) and retailers around the world are doing the same as businesses grapple with the biggest shipping upheaval since the COVID-19 pandemic threw global supply chains into disarray, sources in the logistics industry said.
Florida-based Basic Fun usually ships all Europe-bound toys from its China factories via the Suez Canal, the quickest way to move goods between those geographies, CEO Jay Foreman said in a telephone interview from his Hong Kong office.
That trade route is used by roughly one-third of global container ship cargo, and re-directing ships around the southern tip of Africa is expected to cost up to $1 million extra in fuel for every round trip between Asia and Northern Europe.
Yemeni Houthis' drone and missile attacks in the Red Sea to show their support for Palestinian Islamist group Hamas fighting Israel in Gaza have upended Basic Fun's plans.
The company is now working through the holidays to send toys from China to ports in the UK and Rotterdam via the the longer route.
It is also diverting some goods bound for ports on the U.S. East Coast from the Suez Canal to the drought-choked Panama Canal, while switching others to the West Coast via the direct route across the Pacific Ocean.
«It's just going to take longer and it's going to cost more,» said Foreman, who added that rates for some China-UK freight have more than doubled to around $4,400 per container
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