Many companies are firmly integrated into the globalized economy. Disruptions in the supply chains can quickly have an impact. However, there are no bottlenecks or higher inflation in sight.
The conflict with the Houthi rebels in the Red Sea is having an increasing economic impact on companies in Germany, but is unlikely to lead to even higher inflation for the time being.
The electric car manufacturer Tesla, for example, has to largely stop its production near Berlin for around two weeks because of the Houthi attacks on ships. As transport routes are shifting, a gap has arisen in the supply chains, as Tesla announced.
The Yemeni Houthi rebels repeatedly attack merchant ships in the Red Sea. In response, the USA and Great Britain said they bombed the group’s positions in Yemen on Friday night.
Most shipping companies now avoid the route through the Red Sea and the Suez Canal to Europe and take a detour via the southern tip and west coast of Africa. The journey, which is thousands of kilometers longer, leads to delays lasting weeks.
According to the company, the rebel attacks are causing additional monthly costs in the high double-digit million range for Germany’s largest container shipping company Hapag-Lloyd alone. “It influences the entire industry and also ourselves in a significant way,” said a spokesman for the Funke media group.
According to the economic research institute IfW, the attacks also leave clear traces. The amount of containers transported there is almost 70 percent below the expected volume.
According to a study by credit insurer Allianz Trade, the number of cargo ships passing through the Suez Canal has fallen by 30 percent. At the same time, shipping traffic around the Cape of Good Hope has almost doubled.
Shipping prices, particularly for containers, rose 240 percent from November 2023 to early January, according to Allianz Trade, but are still only a quarter of the peak in 2021.
No bottlenecks in trade expected
Consumers probably don’t have to worry about inflation accelerating for the time being. He does not expect the restrictions to have a noticeable impact on consumer prices, said economic expert Torsten Schmidt from the RWI economic research institute to the German Press Agency. However, the uncertainty contributed to the German economy finding it difficult to overcome its weakness at the beginning of this year.
According to the industry, there are unlikely to be any major bottlenecks in retail either. Companies have set up their supply chains more broadly. “This includes different procurement areas, increased warehousing or alternative products for needs,” said Stefan Genth, general manager of the German trade association. In the long term, it can be assumed that “supply routes will be made more stable and appropriate buffers and alternative strategies will be expanded.”
The oil markets reacted nervously to the American-British attacks. The price of North Sea Brent crude oil rose by almost four percent by midday on Friday.
Source: Stern
