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.
According to a senior intelligence analyst at global security firm Global Guardian, more than 20 vessels have been attacked in the Red Sea since mid-November. 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 response to the recent attacks, shipping giants such as CMA CGA, Equinor, Evergreen, Hapag-Lloyd, Maersk, Orient Overseas, and ZIM have all announced plans to avoid the Red Sea. Energy company BP has also suspended gas and oil shipments in the area.
Before the attacks, 12% of global trade passed through the Suez Canal, according to the U.S. Naval Institute.
As a result of the diversions, shipments will now take an alternative route along Africa's southern tip, adding significant time to the journey. Shipping costs have increased by 14% due to the rerouting, 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," said Freightos Chief Marketing Officer Eytan Buchman.
Amid the threat to ships in the Red Sea, several retailers are taking measures to protect their supply chains. One example is clothing retailer Abercrombie & Fitch Co., which is planning to switch to air freight in order to secure its supplies and avoid delays, according to a report by Bloomberg.
Efforts to improve security in the region are also underway. The United States is forming a 10-nation coalition to combat Houthi attacks in the Red Sea, as stated by U.S. Secretary of Defense Lloyd J. Austin III in a recent statement.
