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Global supply chain strains intensify amid Red Sea disruptions, reports GlobalData

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Disruptions in the Red Sea, Panama Canal, and South China Sea are reshaping global trade and logistics in Q1 2024

The escalating disruptions in the Red Sea have significantly impacted global trade and logistics operations. This disruption and other ongoing issues in the Panama Canal and the South China Sea have reshaped trade dynamics and increased pressure on companies’ logistical capabilities.

According to GlobalData, a leading data and analytics company, supply chain pressure has become a significant concern for businesses during the first quarter (Q1) of 2024.

Rising supply chain costs and delays

GlobalData’s Company Filings Analytics Trends & Signals – Q1 2024 report underscores the influence of events like the Red Sea disruptions on global supply chains.

This situation in the Red Sea has led to higher shipping costs and extended delivery times.

The fluid geopolitical landscape, with additional challenges involving the Panama Canal and the South China Sea, has exacerbated trade concerns.

Misa Singh, Business Fundamentals Analyst at GlobalData, explained, “Political instability and geopolitical tensions continue to impact business operations. Regional conflicts are disrupting suppliers and companies’ ability to source and deliver products.”

“Persistent tensions in the South China Sea have also contributed to these disruptions, reshaping freight flow and delaying the supply of goods, which in turn results in soaring shipping costs.”

Impact on global companies
For instance, Penguin International Limited has faced supply chain disruptions and cost increases from European suppliers shipping through the Red Sea.

Conversely, aerospace, defence, and security company Airbus SE has benefited from the scenario, increasing air freight demand and prices due to longer container ship voyage times amid the Red Sea and Panama Canal blockages.

Shipping companies have resorted to taking longer routes around the Cape of Good Hope, Cape Horn, and the Suez Canal to reach their destinations.

These diversions add further pressure on businesses.

For example, shipping diversions and an arson attack at Gigafactory Berlin-Brandenburg have led to Tesla factory shutdowns.

Additionally, a lack of rainfall in Panama has reduced the number of vessels passing through the Panama Canal.

SLP Resources Berhad has reported delays and extended lead times for goods imported from North America, while supplies from the Middle East and Asia Pacific have remained unaffected.

Source: Logistics Middle East

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