Attacks on shipping passing through the Red Sea have raised concerns over vehicle parts availability, but factors and representative organisations in the industry are looking to reassure garages that supply chains are not under major strain at present. However, delays and cost increases are expected as ships look to avoid the Suez Canal in favour of the longer route around Africa. Since November, Houthi militants in Yemen have been attacking shipping heading towards the Suez Canal, and this has led to operators avoiding the route in favour of the long way round Africa towards Europe via the Cape of Good Hope. The UN Conference on Trade and Development (UNCTAD) estimated at the end of January that trips via the Suez Canal were down 42% on a weekly basis, compared with the preceding two months. IAAF Chief Executive Mark Field said: “The attacks on freight in the Red Sea will no doubt have an effect on the automotive aftermarket. While shipping companies are very experienced at finding solutions, the effects will be more reaching than just longer wait times for products. “These current disruptions will mean rising transport costs, which will have to be passed on to the customer. While we’re not experiencing global factory shutdowns like those during the COVID-19 pandemic, freight prices have again surged with S&P Global reporting that ‘Container freight rates to Europe are at a 15-month high.’” According to data from S&P Global Commodities at Sea, the alternative route has increased westbound transit times for AsiaNorth Europe shipments by 30% and for Asia-West Mediterranean by 60%. As a result of increased fuel consumption and higher bunkering overheads, carriers have been raising charges. Mark continued: “Such issues never exist in isolation. Increased freight rates drive up costs and longer lead times lead to delays, all of which could push prices up in other areas. Some consumer retailers are forecasting as much as an additional 18 days to their expected delivery times.” Mark added: “In the automotive aftermarket, effective communication will be key, as it was during the coronavirus pandemic. Parts distributors will need to continue to work closely with suppliers on maximising availability, which the sector has proven very good at in recent years.” Recent experiences with supply issues should mean that the sector is prepared for a bumpy ride if necessary, as Kevan Wooden, Chief Executive at LKQ UK & Ireland, observed: “Our business is resilient to global supply chain disruption as it forms a crucial part of our promise to deliver for customers. We have strong stock availability across our range despite disruption to shipping from the current Red Sea crisis. That’s thanks to the efforts of our remarkable team that continued to deliver for garages and workshops through COVID-19, the 2021 Suez obstruction, and the outbreak of the war in Ukraine. “Successfully navigating shocks like these is of the upmost importance to our business, and our teams ensure the business puts all resources possible behind providing continuity for our customers.” GSF Car Parts Chief Commercial Officer Paula Huesca de Crean commented: “GSF has been closely monitoring the evolving situation in the Red Sea to ensure we maintain our normal levels of excellent availability and fast supply across our entire branch network. Our logistics team have worked closely with suppliers to re-route inbound containers to alternative ports to avoid the areas adversely impacted by the situation. “We’ve also added buffer stock to our network to ensure that any potential delays as a result of the Red Sea situation do not impact our supply. As yet we haven’t seen any major disruption, but we know we’re fully prepared to react quickly and maintain full service and availability via our network of 180 branches across the UK.” SMMT Chief Executive Mike Hawes concluded: “The auto industry has global supply chains so any disruption has the potential to interrupt operations. Given the situation in the Red Sea, companies are putting in place strategies to manage the issue but there is the likelihood of increased shipping costs, longer lead times for parts, supply gaps and possible spill-over effects on the timely delivery of finished vehicles. SMMT is maintaining contact with businesses and Government to understand the situation and identify ways in which smoother trade can be facilitated.” 4 AFTERMARKET MARCH 2024 www.aftermarketonline.net Red Sea crisis impact on parts: “Strong stock availability…despite disruption” NEWS In association with:
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