Representatives of the Ansarullah movement (Houthis) who attacked ships in the Red Sea, allegationThe safety of Russian and Chinese ships is guaranteed. However, if the crisis continues for a long time, Russian imports may be affected.
“For products with a long shelf life, product suppliers from India, Sri Lanka and Kenya are considering alternative logistics routes bypassing Africa. This will affect delivery times, but not the availability of goods on retailers’ shelves,” Igor Karavaev, chairman of the board of the Association of Retail Trade Companies, told socialbites.ca.
Bloomberg More than 500 container ships carrying everything from clothing to toys to auto parts, which will travel through the Red Sea to the Suez Canal and back, have now added two weeks to their routes to round the Cape of Good Hope, he writes. Southern tip of Africa. Ships sailing on the alternative route are booked until the summer.
According to Karavaev, currently AKORT member retail chains (AKORT includes more than 65,000 grocery stores throughout Russia) do not record any interruptions in the supply of imported products:
“Due to the diversification of flows, Russian retailers have the opportunity to receive their shipments from alternative ports. The supply situation and the need to take additional measures will depend, among other things, on the duration of the crisis unfolding in the region.
“Currently, retail chains have accumulated sufficient stocks in all categories,” stated AKORT President.
Karavaev explained that the situation regarding satisfactory consumer demand remains stable and predictable. According to him, the supply of fresh goods (vegetables, fruits, dairy products, meat, seafood, medicines) in Russian stores is balanced.
“This was done through interaction with different suppliers and, if necessary, can be renewed as soon as possible,” Karavaev said.
What will be more expensive
Associate Professor, Department of Economic Theory, Russian Economic University. Russia imports tea, coffee, rice, seafood, medicine, textiles and shoes, agricultural products and raw materials from India, GV Plekhanova Ekaterina Novikova told socialbites.ca. Tea, coffee, fruit and nuts come primarily from Kenya. From Sri Lanka – textiles including clothing, rubber and fish products. From Vietnam – tea and coffee, textiles. From Turkey – tea and textiles. Novikova added that many goods are imported from China.
On January 19, Ramaz Chanturia, president of the Roschaykofe association, predicted an increase in tea and coffee prices if the conflict in the Red Sea continues.
Yuri Shedko, Doctor of Economic Sciences, Professor of the Department of State and Municipal Administration at the Finance University of the Government of the Russian Federation, evaluated that imported products may become more expensive in the next four to five months, and announced that there are still sufficient reserves. tea and coffee.
Shedko claimed that if the situation does not change within two months, the cost of delivery of imported goods will increase from 50 percent to 100 percent, and the increase in retail prices in Russia may exceed the 10 percent limit.
Novikova also expects price increases:
“Even before the escalation of the situation in the Red Sea, Russia and India were working on the use of Vladivostok ports to make trade between India and Russia more efficient and faster. “As the crisis drags on, the price of goods initially imported to Moscow, for example from Delhi, may rise by 10-15 percent.”
According to him, in the future the situation should improve and the cost of products for the end consumer may even decrease. He also said that the Vladivostok port has become an alternative route for Vietnam and Russia.
“For Russia and the whole world, the situation around the Red Sea means additional costs and time in transporting products, and therefore higher prices. “On the other hand, using Russia’s transportation corridors will offer the domestic economy the opportunity to redirect other countries’ supply chains and make money,” he said.
What’s happening in the Red Sea
Bloomberg notes that missile strikes, drone strikes and hijackings of civilian ships in the Red Sea have even increased costs for shippers in Asia and North America. According to the digital logistics platform, this is approximately a quarter of all container shipping capacity in the world.
The cost of shipping containers from China to the Mediterranean has more than quadrupled since the end of November (from about $1,000 to over $4,000), the agency writes. The cost of ship insurance is now up to 1% of the price of the vessel. If it costs about $100 million, you will have to pay about $1 million for insurance.
Ship owners told the agency that the turmoil would continue for months or longer. Customers are already trying to adapt. Volvo Car AB and Tesla Inc. It announced that production was stopped in factories in Europe due to the inability to obtain parts from suppliers in Asia. British retailers Tesco Plc and Marks & Spencer Group Plc admit costs will rise. Maersk, the world’s No. 2 container carrier, warned last week that the outage would last for at least several months.
“The longer the shocks last, the greater the economic consequences will be. “Although there is no sign of a rise in inflation yet due to rising costs for shipowners, central banks are already warning of the risks,” writes Bloomberg.
Before this agency reportedIt was stated that the situation in the Red Sea could cause disruption of food supplies, including fruit and coffee, to the European Union. This is fraught with shortages of goods and rising prices. According to Bloomberg, changing shipping routes will inevitably affect the final prices of goods for Europeans. Due to increased delivery times, some products may be damaged or arrive with a long delay.
What are you thinking?
Source: Gazeta
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.