By William Boston and Sarah Nassauer
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
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
"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.
Executives at some businesses are weighing the costs of waiting
for the canal to reopen -- which could be days away or longer,
according to shipping experts -- against the costs and timing of
other transportation options.
Freight rates for shipping containers from Asia to Europe, which
have soared over the past year as retailers and manufacturers have
rushed to restock inventories depleted during the pandemic, have
remained steady during the Suez blockage, but that could change if
it drags on.
"If the delays continue though, that's another story," said
Eytan Buchman, chief marketing officer at Freightos, a Hong
Kong-based digital shipping rate provider. "If it gets bad enough
and carriers choose to reroute around Africa instead of waiting for
the canal to clear, importers will obviously experience delays due
to the longer transit time," Mr. Buchman said, "and likely
increased prices because of the additional costs associated with
the longer route."
The Warehouse Group Ltd., a North Shore, New Zealand-based
retailer, expects the blockage to exacerbate shipping delays the
company has been dealing with since late last year due to
pandemic-related restrictions. "The Suez Canal is likely to be
blocked for a couple of days, which isn't going to help," Chief
Executive Nick Grayston said on a Wednesday earnings call.
If the Ever Given can't be dislodged quickly, or if the vessel
isn't seaworthy because of hull damage or the weight of its cargo,
shipping lines will have to divert around Africa, extending transit
times and driving up fuel consumption, said Alan Murphy, chief
executive of Denmark-based maritime research firm Sea-Intelligence
A prolonged blockage would exacerbate a continuing container
shortage and tie up more vessels and boxes in the Asia-Europe trade
lane, Mr. Murphy said. "That would force importers to fight for the
available containers," he said, and the problem would ripple out to
other trade lanes the longer the Suez is blocked.
Another alternate route would be shipping goods by rail on the
growing overland networks that have sprung up between China and
Europe. Johannes Schlingmeier, co-chief executive of Container
xChange, an online marketplace for buying and selling shipping
containers, said transportation companies have stepped up their
marketing of those services this week.
Some U.S. importers expecting shipments from India are bracing
for potential delays in coming months because of the Suez Canal
blockage, adding to what has already been a difficult shipping
At Cheektowaga, N.Y.-based Christmas Central, a mostly online
seller of lights, seasonal décor and outdoor items, shipments from
India of items such as outdoor rugs and lanterns aren't yet
delayed, said President Nathan Gordon. But if ships head back to
India later than planned, that could affect shipments booked weeks
from now, he said.
"They haven't said there are any issues yet, but anything is
possible with the shipping disasters happening this year," said Mr.
Parmy Olson, Saabira Chaudhuri, Jennifer Smith, Paul Page and
Mark Maurer contributed to this article.
Write to William Boston at email@example.com and Sarah
Nassauer at firstname.lastname@example.org
(END) Dow Jones Newswires
March 25, 2021 13:46 ET (17:46 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
Grafico Azioni Heineken (EU:HEIA)
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Grafico Azioni Heineken (EU:HEIA)
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