What’s driving Asia-Europe trade?

Trade flows have been sent into chaos amidst the outbreak of global conflict. Attacks against international shipping in the Red Sea is just the latest conflagration to have forced a rethink in the minds of logistics managers, particularly when it comes to the Asia-Europe trade lane.

The wave of drone and missile strikes conducted by Iranian-backed, Yemen-based Houthi rebels have been particularly vexing for ocean liners. With little to no sign that the attacks will stop anytime soon, and a seeming failure of the joint US-UK Operation Prosperity Guardian to offer reassurances for vessel operators sending their fleets via the Suez Canal, many have reluctantly opted to reroute ships around Africa’s Cape of Good Hope, adding not only an extra 10-15 days onto journey times, but countless surcharges and costs for shippers.  

Already it seems the impact of the decision is being felt in supply chains, with the likes of Tesla, Volvo, and other manufacturers having delayed or even suspended certain operations while they await the arrival of spare parts.

Announcing the news, a Tesla spokesperson told reporters: “Armed conflicts in the Red Sea and the associated shifts in transport routes between Europe and Asia via the Cape of Good Hope are having an impact on production in Grünheide. Considerably longer transportation times are creating a gap in supply chains.”

Such conditions are, unsurprisingly, unsustainable, particularly for car manufacturers, which have become dependent on the just-in-time supply flows of the Asia-Europe trade lanes. And yet, the disorder has also highlighted the pivotal role of air cargo on this trade lane, with many now arching their heads to the skies as they seek a clearer path to market.

Jérôme de Ricqlès, maritime expert at Upply, said alternative Asia-Europe routings were “relevant again”, not only by rail but a sea-air combination via Gulf hubs.

“The price differential compared with an all-sea option remains significant, but for deliveries of highly time-sensitive shipments, these solutions will be worth considering if the situation continues,” added de Ricqlès.

Ricqlès’ suspicions have echoed the opinion of a wave of forwarders claiming that the Red Sea crisis has been something of a boon for those with airfreight capacity between Asia and Europe.


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