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Retailers Scramble To Avoid Delay In Delivery Of Their Spring Collections Because Of The Attacks On Ships In The Red Sea

Retailers Scramble To Avoid Delay In Delivery Of Their Spring Collections Because Of The Attacks On Ships In The Red Sea
Retailers around the world are stockpiling products ahead of China's Lunar New Year vacation and looking for air or train alternatives to shipment via the Red Sea in an effort to prevent bare shelves come spring, executives and experts told Reuters.
One European retailer stated that it was suspending marketing efforts for specific products until supply were secured.
Following militant attacks on vessels in the Red Sea, major container ship operators such as Maersk and Hapag-Lloyd are rerouting ships away from the Suez Canal, the shortest route from Asia to Europe.
The diversions have sparked concerns about another long-term disruption to global trade, just as supply networks are beginning to recover from the COVID outbreak.
Instead, travelling around southern Africa adds $1 million in gasoline expenditures and around 10 days to the expedition.
Interviews with five stores selling anything from furniture to mechanical components, as well as analysts, reveal the unconventional ways that companies are trying to adapt.
BDI Furniture, based in the United States, is prioritising orders and shifting production to companies in Turkey and Vietnam. It is also requesting that freight brokers avoid the Panama and Suez canals and carry goods over the Pacific Ocean to California, where they will be delivered by rail to its east coast warehouse in the United States.
Hanna Hajjar, vice president of operations at BDI Furniture, stated that the company has low stockpiles of several media cabinets, bedroom, and office furniture that are already aboard ships.
"We just did not expect all these recent delays," he said, adding that the disruptions have lengthened transit times from Vietnam by 10-15 days.
Companies carrying goods from China to Europe and the United States are exploring alternatives such as rail and air, but high costs need them to be selective about which products they prioritise.
According to Hajjar, BDI is using the California route on a case-by-case basis because the cost of shipping through Suez or Panama has doubled.
Even though Asia-to-Europe traffic is most vulnerable to Suez interruptions, up to 30% of cargo reaching the United States East Coast pass through the canal.
Retailers are also in a race against time. On February 10, factories in China close for anything from two weeks to a month for the Lunar New Year break, so corporations normally aim to ship as much as possible beforehand. 
However, with the vessels redirected, fewer ships will return to China in time to load goods before the vacation. This means that products scheduled to arrive on Western shelves in April or May will most certainly face delays. Logistics experts have already reported a container shortfall at China's Ningbo port.
"The worst thing to happen to a retailer is having a significant delay on a product that they won't be able to market because of seasonality," said Rob Shaw, general manager for EMEA at inventory software company Fluent Commerce.
Aldi Nord in Europe has stated that it may get household goods, toys, and decorations later than expected, and that as a result, it would postpone advertising of specific products.
Britain's Next stated that the delays were minimal in comparison to those seen during the outbreak. The store, which obtains the majority of its products from Asia, may mitigate this by purchasing early and employing more air freight.
"The lessons (from COVID) are on stock being delayed - order a little bit earlier and allow for a little bit more air freight," CEO Simon Wolfson told Reuters.
A rail line between western China and eastern Europe is one idea.
According to Craig Poole, UK managing director of Cardinal Global Logistics, the cost of using it has risen to roughly $9,000-$10,500 per 40-foot container, up from around $7,000 in November, and is increasing everyday.
IC Trade, which exports mechanical components from China to Italy, is looking into rail options, but "it's not easy to find the space," said founder Marco Castelli. "To make up for one vessel, you need 100 trains."
LPP, a Polish fashion store, announced that it is contemplating rail or sea-air alternatives for its "most urgent" collections.
According to RBC analysts, ongoing interruptions might reduce European retailers' gross profit margins, while the likelihood of new supply chain difficulties pushing up prices has increased concerns about another bout of global inflation.
For other businesses, the new interruptions emphasise the need to permanently restructure supply chains so manufacturing are closer to the end consumer, a technique known as "near-shoring".
BDI Furniture intends to reduce its reliance on China to 40% of total orders during the next two to three years, down from 60% today, by sourcing more from Vietnam and Turkey.

Christopher J. Mitchell

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