Ikea is warning of possible shortages of some of its products as shipping companies bypass the Red Sea, one of the world’s busiest trade routes, because of mounting security threats in the region.
A number of major container carriers are diverting shipments from a key waterway that leads to the Suez Canal because of a series of attacks on vessels by Houthi militants from their bases in Yemen, data from freight shipping platform Freightos shows. The Iran-backed Houthis vowed last month to strike ships it suspects of having Israeli ties in a show of support for Hamas, the Gaza-based militia that has been at war with Israel since its Oct. 7 attack on the country.
“The situation in the Suez Canal will result in delays and may cause availability constraints for certain IKEA products,” the Swedish furniture retailer’s parent company, Inter IKEA Group, told CBS MoneyWatch on Thursday.
The company said it is evaluating its options to ensure the availability of its products. Ikea does not own any container vessels, and its transportation partners manage all the company’s shipments, an Inter IKEA Group representative noted.
More than 20 vessels have come under attack in the Red Sea since mid-November, according to Zev Faintuch, a senior intelligence analyst at global security firm Global Guardian. As a result, 19% of freight is now being diverted from the Suez Canal, the shortest trade route between Europe and Asia, according to the Freights Baltic Index.
In recent weeks, shipping giants including CMA CGA, Equinor, Evergreen, Hapag-Lloyd, Maersk, Orient Overseas and ZIM have all said they plan to avoid the Red Sea while the violence persists, and energy company BP said Monday it has suspended gas and oil shipments in the area.
Before the recent flurry of attacks in the region, 12% of global trade passed through the Suez Canal, according to the U.S. Naval Institute.
The diverted shipments will now pass through an alternative route along Africa’s southern tip, adding days or weeks to shippers’ journeys. Shipping costs have jumped 14% since freight carriers moved to reroute around the Suez Canal because of the heightened risk of attacks, according to Freightos data.
“The impact of the trade diversions will be quite dramatic…[resulting in] longer lead times and higher costs until security is restored,” Freightos Chief Marketing Officer Eytan Buchman told CBS MoneyWatch.
Other retailers are also acting to protect their supply chains amid the threat to ships in the Red Sea. For example, clothing retailer Abercrombie & Fitch Co. is planning to shift to air freight to secure its supplies and avoid delays, Bloomberg reported on Thursday.
Meanwhile, efforts to improve security in the region are underway. The U.S. is forming a 10-nation coalition to quell Houthi attacks in the Red Sea, U.S. Secretary of Defense Lloyd J. Austin III said Monday in a statement.