Recently, the Red Sea and the Suez Canal have come under drone and missile attacks due to the ongoing conflict between Ethiopia and Israel. Initially, only ships heading to Israel were targeted, but as the conflict escalated, vessels unrelated to Israel also became targets of drone and missile attacks. This has disrupted the transportation of goods, causing a disturbance in the rhythm of the global supply chain.
Currently, the British Petroleum (BP) has temporarily halted the transportation of oil through the Red Sea, leading to a rise in crude oil prices on Monday. Shipping giants like Maersk and energy companies such as Equinor from Norway are rerouting their container fleets around the Cape of Good Hope until the safety of the Red Sea is assured. Taiwan’s Evergreen Marine Corp has announced the temporary suspension of receiving goods destined for Israel. Four major international shipping companies, accounting for 53% of the global container shipping market, have suspended shipping in the Red Sea.
The Suez Canal is one of the most crucial maritime passages connecting Asia and Europe. Approximately 12% of global trade, 15% of cargo ships, and around 30% of oil shipping depend on the Suez Canal. This means that Europe, the Mediterranean, and the East Coast of the United States will all be affected. Moreover, this route is vital for the supply chain of the global bicycle industry. Disruption in the supply chain would directly impact the transportation of goods for the global bicycle industry. The extent of the impact is yet to be determined, as major bicycle markets currently maintain sufficient inventory. Short-term supply shortages may not result in significant losses, but the severity of the impact remains uncertain.
If the safety issues in the Red Sea intensify, rerouting around the Cape of Good Hope will be the only alternative, significantly increasing transportation costs and extending shipping times by 7 to 10 days. In such a scenario, the bicycle supply chain may face even more severe repercussions.
This event also reveals the vulnerability of the global supply chain, especially for Chinese manufacturers whose major export markets are in Europe and North America. Considering the long transportation distances, the efficiency, and flexibility of the supply chain are crucial. Therefore, major manufacturers should strengthen risk management in the supply chain and actively seek alternative solutions to reduce dependence on a specific transportation channel and mitigate risks.
