Tesla, the electric car manufacturer, announces a temporary suspension of its German factory's production for two weeks starting January 29, attributing the pause to delays in parts deliveries caused by attacks on ships in the Red Sea.
Tesla's German factory near Berlin will experience a significant production pause from January 29 to February 11 due to shipping disruptions in the Red Sea.
Delays in parts delivery, a consequence of attacks by Iranian-backed Houthi militants, prompt the temporary shutdown.
Impact on Output:
Tesla estimates that approximately 5,000 to 7,000 cars may not be produced during the two-week pause.
The disruption in the Red Sea shipping route forces companies, including Tesla, to resort to the longer alternative route around the southern tip of Africa.
Global Trade Impact:
Disruptions in the Red Sea shipping route, responsible for 12% of global maritime traffic, begin to affect global trade, resulting in a 1.3% drop in December.
The tensions escalate with U.S. and UK air and missile strikes on Houthi-controlled areas, aiming to halt attacks on ships in the Red Sea.
Oil Prices and Broader Concerns:
Following the military strikes, oil prices surge by 2%, with Brent crude reaching almost $79 per barrel.
Concerns rise about potential broader conflicts in the Middle East impacting oil supplies from the region.
Shipping Industry Challenges:
A report from a German economic institute notes a 60% decline in daily container traffic through the Red Sea, from 500,000 in November to 200,000 in the last month.
Maersk, responsible for moving 20% of global trade annually, diverts ships around Africa due to the Red Sea disruptions, anticipating potential long-term impacts.
Business and Retail Implications:
Businesses, including retailers like Marks & Spencer, express concerns about inflation and availability issues if container ships continue diverting around Africa.
Marks & Spencer highlights potential impacts on clothing availability in February and March, with possible disruptions in alcohol deliveries.
As tensions persist in the Red Sea, various industries grapple with the repercussions, impacting production, trade, and the global economy.