Houthi attacks in the Red Sea keep the global economy in suspense: concern grows about the impact on industries

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Houthi attacks in the Red Sea are causing widespread disruptions to global trade, leading to delays and increased costs for a variety of industries. The attacks, carried out by rebels in Yemen, are aimed at cargo ships traveling between Asia and Europe, and the United States, diverting traffic away from the Suez Canal and around the tip of Africa.

The disruption is adding to existing port jams related to the pandemic and Russia’s invasion of Ukraine. The attacks are causing significant delays and raising costs at a time when the world economy is already struggling with rising inflation.

Ryan Petersen, CEO of supply chain management company Flexport, described the situation as “short-term chaos,” leading to increased costs. The attacks have forced cargo ships to divert from their usual routes, causing delays and confusion throughout the shipping industry.

The disruption in the Red Sea is having a global impact, with shipping capacity being diverted from the Red Sea, leading to significant increases in shipping costs. The cost of shipping a standard 40-foot container from Asia to northern Europe has risen sharply in recent weeks.

The disruption is impacting a wide range of industries, from automotive manufacturing to retail, with companies reporting production delays and supply chain challenges. Electric car maker Tesla has had to close its factory in Germany due to shipping delays, while Volvo and Suzuki Motor Corp. have also experienced production halts due to delays in sourcing parts.

The disruption in the Red Sea poses a risk to global food security, according to Jan Hoffmann, a U.N. shipping expert. The slow distribution of grain to parts of Africa and Asia, which depend on the sea for wheat imports, could have serious implications.

Despite the challenges, companies are finding ways to manage the disruption. While household items may not be as “fashion-sensitive” as clothing, the delays in shipping are impacting various industries and raising concerns about the potential long-term impact on global trade.

The ongoing conflict in the Middle East and the disruptions in the Red Sea are causing uncertainty and concern for the world economy, with the potential for further disruptions and increased costs in the months ahead.