ISRAEL AT WAR - DAY 146

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Amid Red Sea attacks, Ikea warns of delay on some products, possible supply shortage

Swedish furniture giant expects deliveries to be delayed as world’s largest shipping firms suspend use of Red Sea waterway, diverting vessels on longer route due to Houthi assaults

Sharon Wrobel is a tech reporter for The Times of Israel.

Israelis shop at an IKEA store in Rishon Lezion, central Israel, October 10, 2014. (Yaakov Naumi/Flash90)
Israelis shop at an IKEA store in Rishon Lezion, central Israel, October 10, 2014. (Yaakov Naumi/Flash90)

Swedish furniture giant Ikea has warned of possible shortages of some of its products as the world’s largest shipping firms are rerouting cargo away from the Red Sea amid a wave of assaults on commercial vessels by Iran-backed Houthi militants.

The Ikea group cautioned that it expects to face delays due to the situation in the Red Sea, which may lead to “availability constraints” for certain Ikea products, without specifying which products or geographies maybe be affected. The furniture chain said it’s looking for alternatives to secure the availability of its products, as many pass through the attacked waterway on their way from factories in Asia to Europe and other markets.

“We are in close dialogue with our transportation partners to ensure the safety of people working in the Ikea value chain and to take all the necessary precautions to keep them safe,” Oscar Ljunggren, a spokesperson of the Inter Ikea Group, which supplies the stores to which it franchises the Ikea brand, said in an e-mailed statement. “In the meantime, we are evaluating other supply options and we continue to monitor the situation closely going forward.”

“Ikea does not own any container vessels, and our transportation partners manage all our shipments,” Ljunggren added.

In Israel, Ikea has operated as a local franchise since 2001, leading the furniture retailing sector with millions visiting its stores every year. Ikea Israel has a total of seven branches across the country, including in Netanya, Tel Aviv, Rishon Lezion, Be’er Sheva and Kiryat Ata.

Since the outbreak of the war between Israel and the Hamas terror group on October 7, the Houthis – also known as Ansar Allah – have increasingly been staging drone and missile attacks on Israel-related or affiliated ships in the Red Sea. The armed militant group that controls much of northern Yemen and that has declared itself part of the “axis of resistance” of Iran-affiliated groups, has in recent days threatened to attack any ships with Israeli ownership or bound for one of the country’s ports, until Israel stops the war.

In a show of solidarity and support with Hamas, Houthi militant forces have been attacking merchant ships sailing past Yemen on their way to or from Egypt’s Suez Canal, the main waterway connecting Asia and Europe, where 12 percent of the world’s trade passes.

Iran-backed Houthis in Yemen publish a video showing how the group hijacked an Israeli-linked shipping vessel in the Red Sea on November 20, 2023. (Screen capture/X)

In response to the indiscriminate attacks on vessels in the Red Sea, more than half of the world’s largest container freight companies, including Danish shipping giant Maersk and German shipping company Hapag-Lloyd, over the past few days decided to temporarily suspend sending their vessels through the Red Sea, until security is restored.

Instead, container ships bound for Israel and linking to Europe from the Far East are diverting to a longer route around Africa and the Cape of Good Hope, increasing the shipping time of goods by two to four weeks and raising the costs per ship by up to $1 million.

“Houthi hostilities in the Red Sea pose a direct threat to maritime trade, leading to shipping diversions,” said Judah Levine, Head of Research at Freightos, a Jerusalem-based smart freight booking and payment platform. “As of this week, six of the ten largest container carriers will be diverting away from the Red Sea and Suez Canal, that makes [up] 19% of global container trade, taking longer, more expensive routes to their destinations.”

“Given the canal’s extensive role in global trade, facilitating movement of 30% of global container trade, even if the disruption is short-lived, it will likely result in delays and increased freight rates,” Levine commented.

In light of the escalation of assaults and the global impact on trade, the US on Monday announced a 10-nation coalition to counter Houthi missile and drone attacks and protect ships transiting the Red Sea, with Britain, France, Bahrain and Italy among countries joining the “multinational security initiative.”

AP contributed to this report.

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