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Factbox-How companies are responding to attacks on ships in the Red Sea

Published 27/03/2024, 15:13
© Reuters. People walk past a branch of fashion retailer H&M in Copenhagen, Denmark, March 26, 2024. REUTERS/Tom Little
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(Reuters) - Companies are responding to disruptions to shipping on the shortest route between Europe and Asia.

Attacks in the Red Sea region by Houthi militants in Yemen have prompted several shipping companies to reroute vessels.

Below are details on how companies in various sectors are responding:

AUTOS

** GEELY: China's second-largest automaker by sales, said on Dec. 22 its electric vehicle (EV) sales would likely be impacted by a delay in deliveries.

** MICHELIN: the French tyre maker said on Feb. 12 logistics issues linked to the Red Sea crisis weighed on its finished product flows, mainly natural rubber, but that this would have a "reasonably marginal" effect on 2024 results.

** SUZUKI: its Hungary production plant restarted manufacturing on Jan. 22 as planned following a halt since Jan. 15 due to delays in the arrival of Japanese-made engines.

** TESLA: the U.S. EV maker suspended most car production at its factory near Berlin from Jan. 29 to Feb. 11 due to a lack of components caused by shifts in transport routes.

** VOLVO CAR: the Swedish automaker on Jan. 12 halted production at its Belgian plant for three days due to delays.

ENERGY

** BP (LON:BP): the oil major on Dec. 18 said it had temporarily paused all transits through the Red Sea.

** EQUINOR: it said on Dec. 18 it had rerouted vessels that had been heading towards the Red Sea.

** EDISON: the energy group's CEO said on Jan. 25 it was starting to experience a slowdown in liquefied natural gas (LNG) supplies from Qatar.

** QATARENERGY: The shipping disruptions will impact QatarEnergy's deliveries of liquefied natural gas but not its production, its CEO said on Feb. 12.

The company, one of the world's largest exporters of LNG, had stopped sailing via the Red Sea citing security concerns, a senior source with direct knowledge of the matter told Reuters on Jan. 15.

** SHELL: the British oil major suspended all shipments through the Red Sea indefinitely, the Wall Street Journal reported on Jan. 16. Shell (LON:RDSa) declined to comment.

Its CFO said on Feb. 1 he was making day to day decisions on shipping through the Red Sea.

** TOTALENERGIES: the French energy and petroleum company said on Feb. 7 it has not sent ships through the area for several weeks. Its CEO said the costs of going through the Red Sea have gone up, partly due to higher insurance costs.

** VALERO ENERGY: the U.S. refiner said on Jan. 25 the Red Sea attacks have led to a rise in freight rates for crude oil.

LOGISTICS

** DHL: the German logistic company, which does not operate ships but uses them to transport containers, on Jan. 8 advised customers to take a close look at how they manage inventories.

** FEDEX: the U.S. parcel delivery giant said on Jan. 14 it hadn't seen much of a shift to air freight due to disruptions in the Red Sea.

RETAILERS

** ADIDAS: CEO said on Feb. 1 that shipping disruptions in the Red Sea were negative for gross margins, adding that "exploding" freight rates were driving up costs and shipping delays were causing some delivery issues.

** DANONE: the French food group said in December that most of its shipments had been diverted, increasing transit times. Should the situation last beyond 2-3 months, Danone (LON:0KFX) will activate mitigation plans, including using alternate routes, its spokesperson said.

** H&M: the world's second-biggest listed fashion retailer postponed the start of some Spring/Summer campaigns to adjust to shipping delays caused by the Red Sea crisis, its CEO Daniel Erver said on March 27.

Erver told Reuters the company had asked suppliers to ship products earlier than usual and was accelerating plans to shift production closer to customers.

** IKEA: the furniture retailer is sticking to planned price cuts despite increased costs, and has sufficient stocks to absorb any supply chain shocks, it said on Jan. 15.

** MARKS & SPENCER: the British retailer's CEO said on Jan. 11 the company is expecting some slight delay in clothing and home deliveries from disruption to shipping.

** NEXT: the British clothing retailer's CEO on Jan. 4 said sales growth would likely be moderated if disruptions continued through 2024.

** PEPCO: the Poundland owner warned on Jan. 18 its supply could be impacted in coming months if disruptions continue.

** PRIMARK: Associated British Foods (LON:ABF)' finance director said on Jan. 23 Primark is coping with disruptions by adjusting timings and stock flow.

** SAINSBURY'S: "We're making sure that we plan the sequencing of product from Asia Pacific so that we get products in the right order," the company's CEO said on Jan. 10, adding that long term contracts with shippers "mitigate any cost impact as far as possible".

** TARGET: the U.S. retailer is experiencing some disruptions of shipments from India and Pakistan, a source familiar with the matter said on Jan. 12, calling the effect "minor" overall.

** TRACTOR SUPPLY: deliveries for the U.S. retailer have been delayed anywhere from two to 20-plus days, the company's chief supply chain operator said on Jan. 12.

** WILLIAMS-SONOMA: the Pottery Barn owner is rerouting shipments and has been working on contingency plans, its CEO told CNBC on Jan. 24.

OTHER

** AKZO NOBEL: the Dutch paints and coatings maker's CFO said on Feb. 7 that longer supply lines and increasing costs could impact the company, which sources its raw materials from China.

"For us it's a working capital impact, but it's manageable," he added.

** BHP GROUP: the Australian mining giant on Jan. 25 said the disruptions were forcing some of its freight service providers to take alternative routes, such as Africa's Cape of Good Hope.

** BID CORPORATION the South African food services company is stocking buffer inventory to help offset shipping delays, its CEO said on Feb. 21.

** BRENNTAG: the German chemicals distributor's CEO said on March 7 the Red Sea crisis had led to shipment times of an extra two-to-three weeks for the company's containers, as well as higher costs.

** ELECTROLUX: the Swedish home appliance maker has set up a task force to find alternative routes or identify priority deliveries to try to avoid disruptions.

On Feb. 2 its CEO said that costs related to the developments in the Red Sea were manageable. "If the situation is prolonged I am more worried about higher costs than about risk of having to pause production," he added.

** ESSITY: the maker of brands such as Libresse and TENA said it was staying in contact with impacted suppliers to ensure continued flow of goods. On Jan. 25 its CEO said that it saw a negative impact on its freight costs but he could not specify what that impact would amount to.

** EVONIK: the speciality chemicals maker said it was being hit by "short notice routing changes and delays", and was trying to mitigate the impact by ordering earlier and switching to air freight where possible.

** GECHEM GMBH & CO KG: the German chemicals maker said it had lowered production of dishwasher and toilet tablets as a result of the delays.

** KONE: the Finnish elevator maker said the situation may in some cases delay shipments, but most of its customer deliveries should stay on schedule. Kone said it had prepared for the disruptions by seeking alternative delivery methods and routes.

© Reuters. People walk past a branch of fashion retailer H&M in Copenhagen, Denmark, March 26, 2024. REUTERS/Tom Little

** LEVI STRAUSS & CO: the denim maker is experiencing delays of 10 to 14 days in transit times as a result of continued disruptions to Red Sea shipping. It has shifted some U.S. shipments to the West Coast, avoiding the Red Sea and Suez Canal.

** LOGITECH: the computer peripheral maker's CEO on Jan. 23 said profit margins will be hit by higher transport costs due to the Red Sea crisis.

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