Ikea Faces Hurdles: Red Sea Attacks Disrupt Shipments, Leading to Potential Product Delays

Ikea is cautioning about potential product shortages due to shipping companies circumventing the Red Sea, a crucial trade route, owing to escalating security threats in the region. 

Major container carriers are diverting shipments away from the waterway leading to the Suez Canal due to attacks by Houthi militants based in Yemen, according to data from the freight shipping platform Freightos. 

The Iran-backed Houthis recently pledged to target ships suspected of having Israeli connections, expressing solidarity with Hamas, the Gaza-based militia engaged in hostilities with Israel since its October 7 attack on the country.

Ikea Strategizing to Ensure Product Availability

The company has stated that it is currently assessing various strategies to guarantee the continued availability of its products. 

It is important to note that Ikea does not possess any container vessels, and the management of all the company’s shipments is handled by its transportation partners, as highlighted by a representative from the Inter IKEA Group.

As indicated by Zev Faintuch, a senior intelligence analyst at the global security firm Global Guardian, more than 20 vessels have been subjected to attacks in the Red Sea since mid-November. 

Consequently, the Freights Baltic Index reports a diversion of 19% of freight from the Suez Canal, which traditionally serves as the shortest trade route connecting Europe and Asia.

In the recent weeks, prominent shipping companies such as CMA CGA, Equinor, Evergreen, Hapag-Lloyd, Maersk, Orient Overseas, and ZIM have all declared their intentions to steer clear of the Red Sea amid ongoing violence. 

Additionally, energy company BP announced on Monday that it has halted gas and oil shipments in the area.

Prior to the recent surge in attacks in the region, the US Naval Institute reported that 12% of global trade transited through the Suez Canal.

Rerouted shipments will now take an alternative route along the southern tip of Africa, adding several days or weeks to shippers’ journeys. 

According to Freightos data, shipping costs have increased by 14% as freight carriers chose to reroute away from the Suez Canal due to heightened attack risks.