Damaging Supply Chain Disruptions Return with a Vengeance
(12 July 2024 – Australia) The Red Sea and Asia shipping crises are reigniting harmful supply chain disruptions last experienced during the height of the pandemic.
The threat of attacks on logistics by Yemen’s Houthi militants off the Horn of Africa has forced shipping to reroute around South Africa in what suppliers lament has become a “new normal” adding weeks to delivery timeframes and creating the worst congestion at the Port of Singapore since the pandemic. Average shipping container freight rates have surged 300 percent year-on-year, including a ten percent increase in one week this month to US$5868 according to Drewry.
Unpredictable delivery timeframes from Asia and Europe are also forcing more Australian companies to store more products locally, driving up costs.
“At a time when the inflation fight on goods, as opposed to services, is looking in excellent shape in most places, this is a spanner in the works that we could do without. That spanner is a bit more relevant in Australia because our inflation fight is still a bit more touch and go” commented Freelance Economist Chris Richardson.
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