The international shipping crisis caused by attacks by Yemen’s Houthi forces on ships crossing the Red Sea is already having a direct economic impact on industry in the Alicante province. And beyond delays in the transportation of goods, The increase in costs due to the suspension of major shipping routes through the Suez Canal is eating up around 5% of companies’ margins. This is the case for textile and plastic companies, which have already warned that they will have to reflect these increases on their products. They complicate things further in shoes, given that the industry has already reached an agreement with its customers on prices for the spring-summer season, so they will have to absorb these increases, at least for now.
The ongoing conflict in the Red Sea, an important channel for goods from Asia to Europe, Import routes from this region have been extended by more than 8,000 kilometersThis means container ships’ journeys take 40 to 45 days longer and costs increase by up to four times. This directly affects sectors that are more dependent on these goods, which are already realizing the economic consequences, even if they have not experienced supply problems, at least for now.
An example of this is the textile industry, which is already experiencing a complex situation as reduced consumption due to inflation caused companies’ turnover to decrease by approximately 2% last year. Therefore, what happened in the Suez Canal adds a new problem to the ones already registered. Pepe Serna, President of the Association of Textile Entrepreneurs of the Valencian Community (Ateval), puts it this way: “Costs have increased by up to 5%, with a dynamic that gets worse day by day. Companies will have no choice but to start reflecting this in the prices of their products because otherwise they will lose money.”.
It also states: Companies currently exist“But,” warns s, “we don’t know how long it will take because there are no ships. Moreover, those that do exist have changed their routes, so that sometimes instead of going directly to the port of Valencia, they first pass through other destinations such as Turkey, which increases waiting times.”
Héctor Torrente, director of the Ibiae employers’ association, which brings together the plastic cluster in Foia de Castalla, expresses himself in similar terms. In his words, “Companies are becoming aware of the delays and, above all, the impact on costs, which are increasing day by day.” This fact, he adds, represents a setback that runs counter to profit margins, so “there will be no choice but to reflect this in prices,” he explains. However, he underlines that it will not be easy for orders that are already closed. “We will try to negotiate with customers, but if there is no agreement there will be no choice but to assume the agreed prices.“, mint.
But the worst-off sector is certainly the footwear industry, which is most dependent on Asian imports. Marián Cano, president of the Valencian Footwear Entrepreneurs Association (Avecal), states the following on this subject: “It will not be possible to miss these increases, as the prices of the spring-summer collection have already been promised.Therefore, it will be the responsibility of these companies.”
As in textiles, This new negativity is added to the negativities already experienced by the sector, where exports have decreased significantly in recent months. Due to the withdrawal of consumption in European markets. According to the president of the association, prices are likely to rise in the next collection, but he concludes that there is hope that “the conflict will not last too long.”