Companies Consider Alternative Routes, Assess Costs as Suez Canal Blockage Continue

European and international companies are bracing for possible rising costs and growing supply-chain complications as the blockage of the Suez Canal heads into a fourth day amid signs of still longer backlogs.

Retail and manufacturing importers are watching for delays in their supply chains that already are strained by global disruptions, and some are considering alternative routes, including sending goods using pricier airfreight or on ships sailing around Africa, which could stretch out deliveries by as long as two weeks.

“We are keeping an eye on the situation,” a spokesman for Dutch brewing giant Heineken NV said, adding that a few of the company’s containers are delayed. “We feel comfortable for now with the contingencies we have in place,” the spokesman said.

The companies are tracking the growing backlog at the Suez Canal as authorities there struggle to refloat the Ever Given, a 1,300-foot ship operated by Taiwan-based Evergreen Group that got stuck in the canal.

The Suez Canal backup mostly won’t affect big U.S. retailers directly, but European companies will see a hit in an already tight shipping market, said Chris Sultemeier, a former executive vice president of logistics for Walmart Inc., the largest importer and retailer in the U.S.

“The Suez is primarily used for Asia to Europe traffic, so from a consumer goods, retailer standpoint it will have a dramatic effect on Europe,” he said.

High-end motorcycle maker Ducati Motor Holding SpA, which manufactures its bikes in Bologna, Italy, and exports globally, said finished products heading to Asia passing through the canal aren’t likely to reach customers on time.

So far, there hasn’t been an impact on Ducati’s production. But Chief Executive Claudio Domenicali said supply disruptions from transport difficulties in recent months are among the biggest threats to the company’s recovery since the second half of 2020. “It’s a bit worse than it was last year,” Mr. Domenicali said.

A Ducati spokeswoman said that the company, owned by German car maker Audi AG, would arrange alternative transportation, including pricier airfreight, should delays at the Suez Canal threaten the import of parts needed for production

Source:- wsj