Attacks on container carriers in the Red Sea by Yemen’s Houthi rebels along with spiralling costs and delays caused by the Panama Canal drought has led to strain in global supply chains that could lead to interruption of deliveries of Western fast fashion retailers from Asia.

The big three shipping lines—MSC, Maersk and CMA CGM—announced they were pausing Suez Canal transits at the onset of the attacks, with many ships re-routing via the Cape of Good Hope rather than risk being fired upon, said David Jinks, parcel delivery company ParcelHero’s head of consumer research and former editor of Lloyds Shipping Index.

As a result, the costs of Asian-manufactured goods heading for the United Kingdom and Europe have increased significantly as manufacturers and retailers both are alarmed due to increased fuel costs and insurance coverage fees as the Cape route is considered less safe due to potential pirate attacks and poor weather around Africa.

The amount of goods carried by vessels using the Panama Canal has drastically reduced due to severe cuts to the daily number of ships permitted.

Downstream inventory issues are expected to be noticeable to consumers in February, with a potential increase in out-of-stock items, Freight software company Project44 reported.

French carrier CMA CGM has already announced a planned $150 per TEU container surcharge.

As a result, retail prices on imported products are expected to rise in the coming months in Europe.

Instead of routine 36 ships that are allowed to transit the Panama Canal a day, a limit of just 20 sailings has been in force from January 1.

This has led to some desperate operators who haven’t booked their transit of the canal months in advance paying up to $4 million at auction, according to European media reports.

Fibre2Fashion News Desk (DS)

Disclaimer - All News/Articles items are subject to copyright and no article either in full or part may be reproduced in any form without permission from Fibre2Fashion Pvt. Ltd.