Global supply chains continue to be disrupted due to the Red Sea crisis

23/07/2024 10:33

The consequences of the Red Sea crisis continue to spread globally, creating significant challenges for supply chains

According to market updates from the world's leading carriers, the aftermath of the Red Sea crisis continues to spread globally, creating significant challenges for the supply chain. Since December 2023, Houthi missile and drone attacks on shipping have caused widespread disruption in the industry, forcing ships to divert around the Cape of Good Hope and expand shipping routes. Maersk emphasized that the next few months will be particularly difficult for carriers and businesses as the Red Sea situation continues into the third quarter of 2024.

The difficulties faced by supply chains and logistics due to the ongoing attacks in the Red Sea and the Gulf of Aden are still ongoing. Maersk's ships continued their circumnavigation of Africa through the Cape of Good Hope, putting additional strain on the already stressed system. Global supply chains continue to face these challenges and deal with the new situations that lie ahead. The major impacts since the crisis began have affected supply chains, with the expansion of circulation to travel longer routes around Africa requiring two to three ships, depending on the trade route. Limited replenishment capacity has further complicated the problem, even as the demand for container shipping remains strong. All ships that could sail and ships that were previously underutilized elsewhere in the world have been redeployed to solve the problem. While this has alleviated some of the problems, there are still significant challenges across the global transport industry.

Asia's exports are more affected than imports due to the region's role as a major global exporter, especially from China. The disruption in the Red Sea not only affects the Far East-Europe routes through the Suez Canal, but also extends to the entire ocean network. For example, the Oceania network faces congestion at critical hubs in Southeast Asia to connect goods to Maersk's global network, resulting in delays and congestion. Information from global carriers said they are trying to mitigate disruptions through significant investments and ongoing operational adjustments, such as securing more containers and enhancing exploration capacity. Transportation companies are preparing for ongoing disruptions by adjusting their networks and supply strategies to align supply with business needs.

Despite the significant disruption, Maersk's report continued strong global demand for goods thanks to strong Asian exports to North America and Europe. Capacity remains limited on various routes from the Far East to Northern Europe, the Mediterranean, the US, South America, West Central Asia, Africa, and Oceania. Intra-Asian routes face a shortage of equipment, especially from China, exacerbating supply chain inefficiencies. The upcoming Pacific hurricane season has more risks. The demand for export containers in China creates a difficult balance for carriers like Maersk in deciding whether to prioritize limited ship capacity for empty containers returning to China or carrying full containers to other destinations, while shipping costs rise. This decision further contributes to the inefficiency of the supply chain.

Source: logistics.gov.vn