Houthi attacks in the Red Sea: Economic effects and consequences for German companies

Houthi attacks in the Red Sea: Economic effects and consequences for German companies

According to a report by www.tagesspiegel.de,

The conflict with the Houthi rebels in the Red Sea is having an increasing economic impact on companies in Germany. Tesla has to largely stop its production near Berlin for around two weeks because the Houthi attacks on ships have led to shifts in transport routes and supply chain gaps. Most shipping companies now avoid the route through the Red Sea and the Suez Canal to Europe and take a detour via the southern tip and west coast of Africa. This leads to weeks of delays and high additional costs.

According to the IfW economic research institute, the attacks also leave a clear mark, as the amount of containers transported is almost 70 percent below the expected volume. The number of cargo ships passing through the Suez Canal has fallen by 30 percent, while shipping traffic around the Cape of Good Hope has almost doubled. Prices for ship transport, especially for containers, have risen by 240 percent from November 2023 to the beginning of January.

Although no noticeable impact on consumer prices is expected, uncertainty surrounding supply chains is adding to the difficulty of strengthening the German economy earlier this year. However, according to industry sources, there are unlikely to be any major bottlenecks in retail.

The financial industry and the market are reacting nervously to the American-British attacks, which has led to an increase in the price of North Sea Brent crude oil by almost four percent. As supply chains are impacted, further uncertainty may arise regarding other commodity prices and transportation situations. The impact could also affect companies' profits due to increased transportation costs.