New intelligence gleaned by ChannelNews, indicates that Chinese brands in particular appliance brands are moving to take advantage of the situation in the Red Sea, to take market share as costs and deliver times are impacted for European manufacturers.
European manufacturers such as Miele, Bosch, Electrolux and Gaggenau, are facing significant cost increases in freight with shipping Companies.
Whirlpool claims its European business would start feeling the impact of the Red Sea crisis, with shipping routes coming under attacks from the Iran-backed Houthi militia.
The attacks have disrupted global trade as more ships take the safer route around southern Africa, adding between 10 and 15 days to transit times with shipping Company now charging up to $2M a boat to sail: the new routes.
“That brings uncertainty more in European supply chain,” Whirlpool CEO Marc Bitzer said on a post-earnings call with analysts last week.
ChannelNews understands that Chinese brands such as TCL, Haier, Fisher & Paykel and the Hisense owned Asko are banking on getting product to retailers quicker than their European competitors a move that is seen as being advantageous to retailers who are already facing stock supply issues due to a build-up of containers on Australian wharves due to the DP World port dispute.
Swedish appliance maker Electrolux who is already struggling to deliver growth has set up a task force to find alternative routes or identify priority deliveries to try to avoid any disruption from the attacks.
The Company moved to act after recent attacks on vessels forced leading shipping companies including Maersk MAERSKb.CO to reroute around the Cape of Good Hope to avoid the Suez Canal
Some retailers have already gone public to reveal the supply problem they are facing.
Greenlit Brands, the owner of Fantastic Furniture and Freedom, have reported lower-than-expected sales through December and January.
According to the South African owned retailer the business has become one of the first major retailers to admit to disruptions caused by the twin challenges of industrial actions by unions and terrorist attacks in the Red Sea, raising the prospect of other retailers facing similar shortages as well as cost blowouts that ultimately could be passed on to consumers to feed into inflationary pressures.
The Company that normally ships goods from South Africa and China have not said how much they are impacted by the Red Sea problems Vs the domestic docks dispute.
Some European manufacturers recently surveyed said 12 to 18 days could be added to some expected deliveries, disrupting their production schedules, and raising inflationary pressures at a time when companies were struggling with weak demand at home and overseas.
The European Union plans to announce its strategy for policing the Red Sea on February 19.
Since November there have been more than 30 attacks on shipping by the Houthis, an Iran-backed militant group.
“This is a different level compared to piracy that shipping companies can’t deal with on their own,” said Raptis.
Despite the growing naval presence in the Red Sea, major shipping companies like Maersk, Hapag-Lloyd and the Mediterranean Shipping Company are avoiding the route.
“If we can have three to four extra navy vessels in the area, I think protection will be fairly high. But true de-escalation might need some diplomatic efforts on the side to avoid violence from spiralling any further,” said Martin Kröger, head of the German shipowners’ association.
