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- By Jonathan Josephs & Faisal Islam
- BBC News
Image source, Getty Images
Tesla is suspending manufacturing at its only European electric car factory as attacks in the Red Sea disrupt supplies.
The firm said longer delivery times had created a gap in its supply chains as shipping companies avoid the route.
The UK government fears if the disruption to cargo traffic spreads then another energy shock is possible.
The electric carmaker is thought to be the first company to reveal a problem with its supply chains after shipping firms came under attack by Houthi rebels.
“The armed conflicts in the Red Sea and the associated shifts in transport routes between Europe and Asia via the Cape of Good Hope are also having an impact on production in Gruenheide,” Tesla said in a statement to Reuters.
It said its Berlin plant will close on 29 January and reopen on 11 February “with the exception of a few sectors” due to a shortage of components.
Houthi rebels in Yemen have stepped up attacks on commercial vessels since the start of the Israel-Hamas war in October. The US said there had been 27 attacks in the Red Sea since mid-November.
The group, which is backed by Iran, has been using drones and rockets against foreign-owned vessels transporting goods through the strait of Bab al-Mandab – a 20-mile wide channel that splits Eritrea and Djibouti on the African side and Yemen on the Arabian Peninsula.
Ships usually take this key trade route from the south to reach Egypt’s Suez Canal further north.
The Houthi group has declared its support for Hamas and has said it is targeting ships travelling to Israel, although it is not clear if all the ships that have been attacked were actually heading to Israel.
Many companies are now sending vessels around the Cape of Good Hope instead, a route that adds at least 10 days of travel.
Currently, about a quarter of the world’s shipping containers are being diverted.
According to the White House, about 15% of global seaborne trade passes through the Red Sea. This includes 8% of global grain, 12% of seaborne oil and 8% of the world’s liquified natural gas.
The boss of shipping giant Maersk told the BBC that “significant disruption” to global trade was already being felt “down to the end consumer”.
Prior to the military strikes on Thursday, Maersk chief executive Vincent Clerc had called for a “stronger mobilisation” to repel the attacks, which he said would lead to higher prices for customers.
Earlier this week, Tesco boss Ken Murphy warned the disruption “could inflate the cost of some items but we just don’t know at the minute”.
Next, Ikea and Danone have said they are expecting delays in receiving goods too.
Oil prices also rose on Thursday after Iran seized a tanker off the coast of Oman. The oil tanker was heading for Turkey when armed men ordered it to sail to an Iranian port.
On Friday, the price of Brent crude – the international benchmark for oil prices – rose by 2% to $78.94 per barrel while US West Texas crude increased by 2.1% to $73.55.
The BBC understands the Treasury has modelled scenarios including crude oil prices rising by more than $10 a barrel and a 25% increase in natural gas.
The government is concerned ongoing attacks on shipping in the Red Sea could further shrink the UK economy if disruption goes on to affect tanker traffic more widely.
Iranian-backed Houthi rebels in Yemen have said the attacks are in sympathy with Palestinian suffering in Gaza and the group’s leader Abdel-Malek al-Houthi said on Thursday that they “will not back down”.
As a result of the attacks, Maersk and several of the world’s other major shipping lines have been avoiding a key route for global trade as they prioritise the safety of their crews.
“We have ships that are being shot at. We have colleagues whose lives are at risk when this happens and we can simply not justify sailing through these danger zones the way the situation is right now,” Mr Clerc said.
He said the longer route around Africa was sucking capacity out of the global shipping system in the short term, adding anything from seven days to two weeks to a ship’s journey, as well as costing $1m (£783,000) more in fuel alone.
Rates for moving cargo by sea reached record highs during the pandemic but, along with shipping companies’ profits, have fallen significantly over the last 18 months or so.
However, the industry has spare capacity partly because the higher cost of living in much of Europe and the US over the last two years has led to a fall in consumer demand.
“And so it’s having a real impact on people around the world in their daily lives.”
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