Terrorist attacks on commercial ships in the Red Sea have driven up shipping costs by more than 600% since the outbreak of the conflict between Israel and Hamas, potentially undermining the Federal Reserve's efforts to curb U.S. inflation.
Crude oil prices briefly topped $80 a barrel on Friday, but rose to $78.29 a barrel as the world's shipping giants diverted ships full of containers through the Suez Canal and continued the long journey past the Cape of Good Hope. I settled on dollars.
A trip around southern Africa would cost $1 million in fuel, take about 10 days to travel, and risk disrupting supply chains like the one that roiled the U.S. economy after the pandemic.
“This is a world that is vulnerable to begin with on the supply side, but then we get another shock,” economist Mohamed El-Erian said in an interview on Bloomberg TV on Friday.
Keeping ships out of the line of fire of Houthi rebels has sparked a “global contagion”, with the cost of shipping a 40-foot container between North Asia and Europe soaring to $6,000, with 600 units shipped since October. % is also rising. According to CNBCcited S&P Global Commodity Insights.
The United States was also affected, with prices from North Asia to the East Coast rising 137% to $5,100, while prices from North Asia to the West Coast rose 131% to $3,700, S&P Global reported. are doing.
“The longer this crisis drags on, the more disruption there will be to sea freight transport around the world and costs will continue to rise,” Peter Sand, principal analyst at cargo platform Zeneta, said on Friday.
Major importers including Tesla, Geely's Volvo Cars and Ikea have already reported product shortages or warned of delays in receiving goods.
Target also announced that products shipped from Pakistan and India are affected.
New price pressures mean Americans will continue to be weighed down by high borrowing costs, even as investors hope the Fed will begin cutting interest rates, currently the highest in 22 years, as soon as March. may mean.
Lingering inflation could also pose a major obstacle to President Joe Biden's re-election efforts.
On Thursday, the latest consumer price index, which tracks changes in the cost of everyday goods and services, showed inflation rose by a stronger-than-expected 3.4% in December.
This number remains above the Fed's 2% target rate.
In a note to clients ahead of the CPI release, JPMorgan warned that the fight against inflation could stall in the coming months if higher transportation costs drive up commodity prices.
“The new rise in global transportation costs, if ultimately reflected in higher final product prices, will actually further accelerate consumer price inflation over the coming months,” the analyst said, according to CNBC. There is a possibility.”
“Such results would strengthen expectations that progress towards lowering global core CPI inflation will stall this year.”
Tesla announced on Friday that it will suspend production of electric vehicles at its largest factory in Berlin, Germany, for two weeks from January 29 to February 12 due to the Red Sea conflict.
“Significantly longer transit times have created gaps in our supply chain.Due to parts shortages, we have had to temporarily suspend vehicle production at our Berlin-Brandenburg Gigafactory,” Elon Musk said. a management spokesperson said. the company told the Wall Street Journal..
Tesla manufactures the Model Y at a factory in Germany.
Swedish discount furniture giant IKEA had already warned last month that the Red Sea diversion was causing delays in its supply chain.
A spokesperson said at the time that the company was “considering other supply options to ensure the availability of our products” but that the safety of staff working in its supply chain was its priority.
Other European retailers are reportedly postponing marketing campaigns for products affected by the waterways crisis until stocks are available. According to Reuters.
Meanwhile, US-based BDI Furniture is bringing forward orders and moving to factories in Turkey and Vietnam, with a major goal of reducing dependence on China from 60% to 40% of total orders within the next three years. increasing dependence on
The Virginia-based furniture maker also offers freight brokers the option to bypass the Panama and Suez canals, transport goods across the Pacific Ocean to California, and then transport them by rail to the company's U.S. warehouses on the East Coast. Reuters reported.
Hanna Hajjar, BDI Furniture's vice president of operations, told the media that some media cabinets, bedroom furniture, and office furniture that have already been shipped are low in stock.
“We did not expect the recent delays at all,” he said, adding that the disruption had extended transit times from Vietnam by up to 15 days.
