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Houthi attacks in the Red Sea are idling car factories and delaying new fashion. Will it get worse?

Houthi attacks in the Red Sea are idling car factories and delaying new fashion. Will it get worse?

ABC News
Sunday, January 28, 2024 05:31:58 AM UTC

Attacks on ships in the Red Sea by Yemen’s Houthi rebels have unraveled a key global trade route, forcing vessels into longer and more costly journeys around Africa

WASHINGTON -- Car factories have idled in Belgium and Germany. Spring fashion lines are delayed at a popular British department store. A Maryland company that makes hospital supplies doesn’t know when to expect parts from Asia.

Attacks on ships in the Red Sea are delivering another shock to global trade, coming on top of pandemic-related logjams at ports and Russia's invasion of Ukraine.

Houthi rebels in Yemen, seeking to stop Israel's offensive against Hamas in Gaza, are attacking cargo ships plying the waters connecting Asia with Europe and the United States, forcing traffic away from the Suez Canal and around the tip of Africa. The disruption is causing delays and driving up costs — at a time when the world has yet to vanquish a resurgence of inflation.

“What’s happened right now is short-term chaos, and chaos leads to increased costs," said Ryan Petersen, CEO of the supply chain management company Flexport. “Every ship that gets rerouted has 10,000 containers on it. It’s a lot of emails and phone calls getting made to replan each of those container journeys."

Adding to the bedlam in global shipping is what Petersen calls a “double whammy": Passage through another crucial trade corridor — the Panama Canal — is restricted by low water levels caused by drought. And shippers are in a rush to move goods before Chinese factories shut down for the Feb. 10-17 Lunar New Year holiday.

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