Tesla to Qatar Energy: How companies are responding to Red Sea tensions

Companies are responding to disruptions to shipping on the shortest route between Europe and Asia.

Tensions in the Red Sea region due to Houthis targeting ships traversing the waterways have prompted several shipping companies to reroute their vessels and impacted global trade.

Companies react to Red Sea crisis impact on supply chains:

Automotive

GEELY: China’s second-largest automaker by sales, said on December 22 its electric vehicle (EV) sales would likely be impacted by a delay in deliveries.

MICHELIN: The French tyre maker said on February 12 logistics issues linked to the Red Sea crisis weighed on its finished product flows, mainly natural rubber, but that this would have a “reasonably marginal” effect on 2024 results.

SUZUKI: Its Hungary production plant restarted manufacturing on January 22 as planned following a halt since January 15 due to delays in the arrival of Japanese-made engines.

TESLA: The US EV maker will suspend most car production at its factory near Berlin from January 29 to February 11 due to a lack of components caused by shifts in transport routes.

VOLVO CAR: The Swedish automaker said on January 12 it would halt production at its Belgian plant for three days due to delays.

Energy

BP: The oil major on December 18 said it had temporarily paused all transits through the Red Sea.

EQUINOR: It said on December 18 it had rerouted vessels that had been heading towards the Red Sea.

EDISON: The energy group’s CEO said on January 25 it was starting to experience a slowdown in liquefied natural gas (LNG) supplies from Qatar.

QATAR ENERGY: The shipping disruptions will impact QatarEnergy’s deliveries of liquefied natural gas but not its production, its CEO said on February 12. The company, one of the world’s largest exporters of LNG, had stopped sailing via the Red Sea citing security concerns, a senior source with direct knowledge of the matter told Reuters on January 15.

SHELL: The British oil major suspended all shipments through the Red Sea indefinitely, the Wall Street Journal reported on January 16. Shell declined to comment. Its CFO said on February 1 he was making day to day decisions on shipping through the Red Sea.

TOTAL ENERGIES: The French energy and petroleum company said on February 7 it has not sent ships through the area for several weeks. Its CEO said the costs of going through the Red Sea have gone up, partly due to higher insurance costs.

VALERO ENERGY: The US refiner said on January 25 the Red Sea attacks have led to a rise in freight rates for crude oil.

Logistics

DHL: The German logistic company, which does not operate ships but uses them to transport containers, on January 8 advised customers to take a close look at how they manage inventories.

FEDEX: The US parcel delivery giant said on January 14 it hadn’t seen much of a shift to air freight due to disruptions in the Red Sea.

Retail

ADIDAS: CEO said on February 1 that shipping disruptions in the Red Sea were negative for gross margins, adding that “exploding” freight rates were driving up costs and shipping delays were causing some delivery issues.

DANONE: The French food group said in December that most of its shipments had been diverted, increasing transit times. Should the situation last beyond 2-3 months, Danone will activate mitigation plans, including using alternate routes, its spokesperson said.

IKEA: The furniture retailer is sticking to planned price cuts despite increased costs, and has sufficient stocks to absorb any supply chain shocks, it said on January 15.

MARKS & SPENCER: The British retailer’s CEO said on Jan. 11 the company is expecting some slight delay in clothing and home deliveries from disruption to shipping.

NEXT: The British clothing retailer’s CEO on January 4 said sales growth would likely be moderated if disruptions continued through 2024.

PEPCO: The Poundland owner warned on January 18 its supply could be impacted in coming months if disruptions continue.

PRIMARK: Associated British Foods’ finance director said on January 23 Primark is coping with disruptions by adjusting timings and stock flow.

SAINSBURY’S: “We’re making sure that we plan the sequencing of product from Asia Pacific so that we get products in the right order,” the company’s CEO said, adding that long term contracts with shippers “mitigate any cost impact as far as possible”.

TARGET: The US retailer is experiencing some disruptions of shipments from India and Pakistan, a source familiar with the matter said on January 12, calling the effect “minor” overall.

TRACTOR SUPPLY: Deliveries for the US retailer have been delayed anywhere from two to 20-plus days, the company’s chief supply chain operator said on January 12.

WILLIAMS-SONOMA: The Pottery Barn owner is rerouting shipments and has been working on contingency plans, CEO told CNBC on January 24.

LEVI STRAUSS: the denim maker is experiencing delays of 10 to 14 days in transit times as a result of continued disruptions to Red Sea shipping. It has shifted some US shipments to the West Coast, avoiding the Red Sea and Suez Canal.

LOGITECH: The computer peripheral maker’s CEO on January 23 said profit margins will be hit by higher transport costs due to the Red Sea crisis.

Read: Risk is the new normal in ocean shipping as Red Sea tensions reign: Experts