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June 15, 2024

IKEA Faces Delays and Shortages Due to Attacks on Ships Near Red Sea

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Dec 21, 2023

Swedish furniture giant IKEA is warning customers to expect delays and possible shortages for some products over the holidays due to ongoing attacks on commercial ships near the Red Sea. A number of major shipping companies have been impacted, causing ripple effects on global supply chains.

Background on Attacks in Red Sea Region

Over the past couple months, Iranian-backed Houthi rebels in Yemen have stepped up attacks on commercial vessels sailing in the south Red Sea along the Bab-el-Mandeb strait. This narrow waterway connects the Red Sea to the Gulf of Aden and is one of the world’s busiest shipping lanes.

The Houthis have been fighting a years-long civil war against the internationally recognized government in Yemen. Experts say the increase in maritime attacks allows them to pressure their opponents while avoiding outright confrontations on land.

Year Reported Attacks on Red Sea Shipping
2021 3
2022 8
2023 (through Dec 15) 23

Sources indicate the Houthis often use bomb-laden drone boats and sea mines to carry out the attacks. Major targets so far have included oil tankers, cargo vessels, and warships.

While no ships have been sunk, the assaults have damaged several and contribute to growing instability. The UK Marine Trade Operations military branch has designated the area an “enhanced risk zone” and advised ships to exercise extreme caution.

IKEA Faces Delays, Considering Air Freight to Mitigate Impact

On Tuesday, IKEA announced it has Setup an internal task force to deal with potential disruptions from the Red Sea attacks.

The company sources many raw materials and finished products from Asia that are shipped through the critical maritime route on their way to Europe. IKEA stores could face shortages of certain items if the volatile situation drags on.

“We have huge volumes going through the Red Sea, so of course disturbances in traffic there have an effect on supply chains,” said an IKEA spokesperson. “We are monitoring developments carefully.”

To protect against delays, IKEA is considering shifting some transport to air freight. However that option costs nearly eight times more than sea shipping per container. The company has not provided specifics on which products could be impacted by shortages.

Industry analysts say IKEA will likely focus on maintaining inventory of its highest volume and most popular products. For example:

  • Billy bookcases
  • Klippan loveseats
  • Lack side tables
  • Poäng armchairs

“The holiday season is crucial for home goods retailers, so IKEA will do what it takes to get key items on the shelves,” said Nathan Allen, a senior editor at Furniture Today magazine. “But niche products and some custom configurations may be temporarily unavailable if this situation persists.”

Other Global Firms Also Taking Action to Mitigate Risks

IKEA is not the only multinational company worried about disruptions from the uptick in Red Sea shipping assaults. Others with extensive supply chains exposed to potential trouble spots are taking proactive steps as well.

For example, Swedish appliance maker Electrolux has Set up a specialized team to track the attacks and find alternative routes for its cargo if needed.

Diversified manufacturer 3M said it is “monitoring developments and working with logistics partners to minimize impact.” Several oil producers have likewise implemented emergency contingencies to keep crude and refined fuels flowing.

Maritime industry groups have urged governments globally to help counter the threat too. The International Chamber of Shipping association called for more naval vessels to escort commercial ships through high-risk zones.

“Unless governments take action the situation could deteriorate further, exacerbating supply chain problems,” said an association spokesperson.

So while IKEA grabbing headlines, many firms stand to lose out if the Houthi attacks don’t abate soon.

No Sign of Houthis Backing Down as Instability Builds

Unfortunately, there are no indications the Houthi rebels intend to halt their Red Sea offensive anytime soon. If anything, military officials and security analysts say the militant group seems emboldened by the havoc it’s causing.

Houthi leaders have explicitly threatened all ships traversing the region in recent public statements. They also continue acquiring weapons technology to expand their maritime strike capabilities despite an international arms embargo.

Earlier this month, the rebels unveiled a new high-speed missile named Thaqib-3 they claim can hit targets up to 250 km away. Regional intelligence sources believe the weapon was illegally imported from Iran.

“The Houthis appear committed to making the Red Sea as tense as possible,” said Abdulaziz Sulaiman, a security advisor to the Saudi government. “Attacking global shipping brings attention to their cause as the Yemen war drags on.”

With no path for deescalating the underlying core conflicts in sight, most observers regrettably expect instability in the Red Sea region to increase over the next 6-12 months at least. That could spell more supply trouble for multinationals like IKEA with freight routes exposed to trouble.

“Unless major powers can broker an unexpected Yemen peace deal, companies will need contingency plans to handle intermittent shipping disruptions near the Red Sea,” cautioned political risk analyst Carlton McDowell. “The attacks may ebb and flow, but this is the new reality firms must adjust to for the foreseeable future. There are too many overlapping tensions in the area right now to forecast smooth seas ahead.”

So in summary, the recent rise in assaults on commercial vessels near the Red Sea chokepoint by Houthi rebels adds a volatile new dimension to global supply chain challenges. IKEA and other companies stand ready to mitigate fallout using alternative transport methods if needed. Yet with militants seemingly gearing up for more strikes rather than retreating, further shipping disruption seems inevitable.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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