LOS ANGELES
\nToymaker Basic Fun\u2019s team that oversees ocean shipments of Tonka trucks and Care Bears for Walmart and other retailers is racing to reroute cargo away from the Suez Canal following attacks on vessels in the Red Sea.
\nSuppliers for the likes of IKEA, Home Depot, Amazon and retailers around the world are doing the same as businesses grapple with the biggest shipping upheaval since the Covid pandemic threw global supply chains into disarray, sources in the logistics industry said.
\nFlorida-based Basic Fun usually ships all Europe-bound toys from its China factories via the Suez Canal, the quickest way to move goods between those regions, CEO Jay Foreman said in a telephone interview from his Hong Kong office.
\nThat trade route is used by roughly one-third of global container ship cargo, and re-directing ships around the southern tip of Africa is expected to cost up to $1 million extra in fuel for every round trip between Asia and northern Europe.
\nYemeni Houthis\u2019 drone and missile attacks in the Red Sea to show their support for Hamas have upended Basic Fun\u2019s plans. The company is now working through the holidays to send toys from China to ports in Britain and the Netherlands via the longer route.
\nIt is also diverting some goods bound for ports on the US east coast from the Suez Canal to the drought-choked Panama Canal, while switching others to the west coast via the direct route across the Pacific Ocean.
\n\u201cIt\u2019s just going to take longer and it\u2019s going to cost more,\u201d said Foreman, who added that rates for some China-UK freight have more than doubled to around $4,400 per container since October.
\nThe Suez Canal situation remains fast changing, and shippers Maersk and CMA CGM are moving to resume voyages with military escorts through the Red Sea.
\nThe biggest impact likely will come over the next six weeks, said Michael Aldwell, executive vice president of sea logistics for Switzerland\u2019s Kuehne + Nagel. \u201cYou can\u2019t flick a switch\u201d and reorganise global shipping, said Aldwell, who expects the diversions to cause a shortage of vessel space, strand empty containers needed for China exports in wrong places and send short-term transport price indexes sharply higher. According to estimates from freight platform Xeneta, it costs $2,320 to ship a 40-foot equivalent unit (FEU) container from the Far East to the Mediterranean \u201cpost escalation\u201d versus $1,865 per FEU in early December.
\nIt costs $1,625 to ship an FEU from China to the United Kingdom \u201cpost escalation\u201d versus $1,425 per FEU in early December.
\nThese rates do not include \u201cextraordinary\u201d risk surcharges and \u201cEmergency Recovery Cost\u201d that can be between $400 and $2,000 per FEU, Peter Sand, chief analyst at Xeneta, said.
\nScramble for space
\nAs of Wednesday, nearly 20 per cent of the global container fleet \u2014 or 364 hulking container vessels capable of carrying just over 2.5 million full-sized containers \u2014 had been set on a new course due to the Red Sea attacks, according to Kuehne + Nagel data.
\nVessel owners already have begun rationing the less expensive, contract-rate space they reserve for customers, said Anders Schulze, head of the ocean business at digital freight forwarder Flexport.
\nFor example, he said, a customer who delivers five containers a month versus the 10 promised in their contract may only get five containers at contract rates. The remainder would be subject to expensive spot market rates.
\nThis has set off a scramble to reserve space ahead of the early February deadline to get goods out of China before factories there close for the extended Lunar New Year celebrations, logistics experts said.
\nSmall shippers are most at risk of being elbowed out. Marco Castelli, who is based in Shanghai, has been trying to rebook three containers of Chinese-made machinery components bound for Italy.
\n\u201cTransfer my situation to a large corporation and you get what\u2019s going on,\u201d he said. Foreman at Basic Fun, which plans to have about 40 containers on the water before the Lunar New Year, said the company\u2019s contracts with customers don\u2019t include a way to recover the extra expense.
\n\u201cThe price is fixed. (Most suppliers) are going to have to eat those costs.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
LOS ANGELES Toymaker Basic Fun\u2019s team that oversees ocean shipments of Tonka trucks and Care Bears for Walmart and other retailers is racing to reroute cargo away from the Suez Canal following attacks on vessels in the Red Sea. Suppliers for the likes of IKEA, Home Depot, Amazon and retailers around the world are doing […]<\/p>\n","protected":false},"author":2,"featured_media":377614,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[6],"tags":[],"class_list":{"0":"post-377606","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-world"},"yoast_head":"\n