The Impact of Logistics under the Red Sea on War

The spillover effects of the Palestinian-Israeli conflict continue, and tensions are rising in many places in the Middle East. Among them, the dangerous waves in the Red Sea caused by the Houthi armed forces in Yemen have become a major focus in history. Since November last year, the Houthi armed forces have suddenly expanded the scope of their attacks and repeatedly attacked the Red Sea and nearby forests, becoming targets again. The Red Sea crisis has dealt a serious blow to the already fragile global trade and supply chain. Impacts such as rising costs, supply interruptions of raw materials, and extended delivery times are gradually emerging, which are expected to bring risks and challenges to corporate operations.

Why and what are the impacts?

Currently, 90% of the world's trade transportation is completed by sea, and trade passing through the Suez Canal accounts for about the majority of the world's total container shipping cargo. Due to the recent intensification of tensions in the Red Sea and nearby waters, the risk of spillover from the Palestinian-Israeli conflict has affected international shipping. The Red Sea crisis has undoubtedly seriously endangered the transportation safety of this global shipping artery and impacted the global supply chain and economic stability. United Nations data from late January showed that the total number of ships passing through the Suez Canal had dropped by 42% in the past two months. In February, the European Commissioner in charge of economic affairs said that due to the change of shipping routes through the Red Sea, shipping time between Asia and the EU has increased by 10 to 15 days, and transportation costs have increased by approximately 400%. Egyptian President Sisi also stated on February 19 that the Suez Canal's revenue so far this year has dropped by 40% to 50%.

How can we improve and solve it?

Here are a few areas on how to make informed decisions when choosing carriers to transport the freight:

• Measuring on-time performance
• Communication and responsiveness
• Invoice accuracy
• Claims management
• Supplier business reviews

Keeping track of when an item is addressed with the carrier and their response time will allow you to measure their communication, responsiveness, and follow-up. Closely track the progress of the logistics and timely and effective updates, then it can make every effort to provide solutions. In consideration of the costs in all aspects and the contract performance period, we could choose barges to transport to other ports to avoid the Vic Rea Sea or consider the multimodal transport Ocean+Truck to get a better option.

Before arranging the pick-up schedule, you should also consider the backup plan to avoid the time and reduce waiting losses. If you have any questions or would like to ask one of our Allyn Experts about your situation please contact us here.

Contributor: Amity Wu

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About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North America, Europe and Asia and Allyn regional headquarters are strategically located in Fort Myers FL USA, Shanghai P.R. CHINA and Prague, CZECH REPUBLIC. For more information, go to www.allynintl.com