The Crisis In The Red Sea Threatens To Disrupt Global Supply Chains Even More Than The Pandemic Did
If things are this bad now, what will conditions be like during the tremendous chaos that is ahead of us?
By: Michael Snyder | T.H.E.
Do you remember the supply chain problems that we experienced during the darkest days of the COVID pandemic? Well, now we are being warned that the crisis in the Red Sea could actually disrupt global supply chains to an even greater degree. Needless to say, this comes at a really bad time because the U.S. economy has really been struggling lately. The U.S. and the U.K. are desperate to resolve this crisis, and so they have been bombing the living daylights out of the Houthis in Yemen. We haven’t seen anything quite like this from the U.S. military since the early days of the wars in Afghanistan and Iraq. On Monday, there was yet another round of air and missile strikes…
The U.S. and U.K. conducted large-scale air and missile strikes on Houthi rebel facilities across Yemen on Monday, according to a joint statement, stepping up operations against the militant group as it vows to continue attacking ships in the Red Sea.
The U.S. and U.K. militaries, with support from Australia, Bahrain, Canada and the Netherlands, hit eight Houthi targets in Yemen in response to the Houthis’ continued attacks, according to a joint statement from the countries involved. The precision strikes were “intended to disrupt and degrade the capabilities that the Houthis use to threaten global trade and the lives of innocent mariners,” the statement said.
Unfortunately, so far the strikes don’t seem to be doing much good.
The Houthis continue to attack commercial vessels in the Red Sea, and this is greatly frustrating U.S. officials.
When asked about the air and missile strikes, Joe Biden admitted that they are not working but he says that they will continue anyway…
President Joe Biden and his top aides have repeatedly said strikes on Houthi targets alone won’t stop the Iran-backed militants from threatening commercial ships in the Middle East.
When asked by a reporter last week if the airstrikes were working, Biden responded “Well, when you say ‘working,’ are they stopping the Houthis? No. Are they going to continue? Yes.”
In addition to air and missile strikes, will we soon see additional measures?
It is being reported that the Biden administration is now planning a “sustained military campaign” against the Houthis…
Over the weekend US officials told The Washington Post that the Biden administration is planning for a “sustained military campaign” against the Iran-backed Yemeni rebels, even after some seven rounds of major strikes have done nothing to deter or degrade their drone and missile attacks. Notably, US leaders have still refused at this point refused to use the word “war” in relation to the large-scale US coalition attacks on Houthis as part of Operation Prosperity Guardian.
That definitely sounds like a war to me, and Congress has not approved it.
But of course our federal government has not been following the Constitution for a very long time.
So what all of this means is that the crisis in the Red Sea is going to persist for the foreseeable future. At this point, shipping giant Maersk is warning their customers that there will be “significant disruption to the global network”…
The situation around the Red Sea / Gulf of Aden continues to be closely monitored by our teams. In the interest of safety for our vessels, crew and customers’ cargo, all vessels previously due to transit the area have been diverted south around the Cape of Good Hope for the foreseeable future.
While we hope for a sustainable resolution in the near-future and do all we can to contribute towards it, we do encourage customers to prepare for complications in the area to persist and for there to be significant disruption to the global network. Our teams are on hand to support with your planning, should you need any assistance.
And at the World Economic Forum’s yearly gathering the CEO of Maersk actually admitted that we could see “disruptions of the supply chain for a few months at least”…
Maersk CEO Vincent Clerc told Reuters on the side-lines of the World Economic Forum in Davos on Wednesday that global shipping networks will be disrupted for at least a few months:
“So for us this will mean longer transit times and probably disruptions of the supply chain for a few months at least, hopefully shorter, but it could also be longer because it’s so unpredictable how this situation is actually developing.”
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This is very serious.
There will be delays and there will be shortages.
Many commercial ships are now being routed all the way around the continent of Africa, and that can add approximately 3,500 nautical miles to each journey…
Steering clear of the Red Sea and taking the lengthy detour around the Cape of Good Hope, however, adds around 3,500 nautical miles (6,500km) and 10-12 days sailing time to each trip. This requires extra fuel (an additional $1m/£790,000’s worth according to some estimates), possibly finding alternative ports of call, adjustments to delivery timetables, and rising costs. But many companies are making that choice rather than risk attack by missiles and hijackers.
Container lines have been left scrambling to rent enough ships for the lengthened journeys their vessels must now take to avoid the Red Sea, and there are fears that the crisis could have widespread economic impacts, pushing up prices of goods and delaying deliveries of high-value products by weeks or perhaps even longer.
What a mess.
And it isn’t going away any time soon.
One firm that has analysed the crisis in the Red Sea is claiming that it is already damaging global supply chains more than the COVID pandemic did…
A leading ocean supply chain advisory firm is warning that the disruptions to shipping from the Houthi rebel attacks in the Red Sea are already more damaging to the supply chain impact than the early Covid-19 pandemic.
Sea-Intelligence analysed current vessel delays compared to delays over the last several years in a report for clients. The data shows that the longer transit around the Cape of Good Hope as ships divert from the Red Sea is already having a more significant impact on vessels available to pick up containers at ports than during the pandemic. This supply chain measure is known in the industry as “vessel capacity.”
The vessel capacity drop is the second largest in recent years, according to Alan Murphy, CEO of Sea-Intelligence. The only single event with a bigger impact than the Red Sea crisis was the “Ever Given,” the giant cargo ship which got stuck in the Suez Canal for six days during March 2021.
Supply chains in Europe and Asia are being hit harder than supply chains in North America.
In fact, some automakers in Europe have already announced that they are “temporarily halting production”…
Due to the ongoing attacks on Red Sea shipping, major automakers such as Tesla and Volvo Car have announced that they are temporarily halting production in Europe due to component shortages. This development underscores the direct impact of the Red Sea shipping disruptions on regional industrial operations.
Tesla officials said production of most vehicles at its Berlin plant will be suspended from January 29 to February 11. Tesla cited parts shortages resulting from ships being diverted through Africa’s southernmost point as the main reason.
The increased travel time has caused disruptions in the supply chain, and component delays have affected the production of electric cars assembled for the European market. This is just one case that was reported.
But even though Europe and Asia will experience more disruptions than we will, the truth is that the entire globe will eventually feel the pain.
And if the war in the Middle East goes to an entirely new level later this year, which will make things many times worse.
So I hope that you have been getting prepared for the shortages that are coming.
Even now, “tightening supplies” of pork have pushed prices up to extremely alarming levels…
Since mid-December, wholesale spot prices for boxed pork belly 200 pounds jumped from $80 to more than $133, or about a 66% increase on tightening supplies.
The environment for pork producers was challenging in 2023, with many losing, on average, $32 per head. This trend is expected to continue this year.
Last month, Smithfield Foods, the world’s pork processor, revealed it would shutter 26 of its contracted hog operations across Utah.
This is just the tip of the iceberg.
Supplies of so many things are going to be getting tight in the months ahead.
Needless to say, our society is not going to handle any major economic disruptions very well.
Poverty, homelessness and hunger are all rapidly growing, and our cities are absolutely packed with vast hordes of extremely desperate people.
We now live in an environment where many of these extremely desperate people will get violent at the slightest provocation…
A man urinating on a parked car in Manhattan slashed the throat of a passerby who told him to stop, leaving the victim clinging to life, police said Monday.
The 66-year-old victim and two other passersby complained when they saw the stranger urinating on a car parked on E. 14th St. near First Ave. in the East Village about 5:05 p.m. Sunday, cops said.
That sparked an argument, during which the victim was slashed in the neck, causing what police described as a “severe laceration.”
If things are this bad now, what will conditions be like during the tremendous chaos that is ahead of us?
Everything that we have been through since the early portion of 2020 has just been a preview of coming attractions.
We are still only in the very early chapters of this “perfect storm”, but most people out there still believe that things will “return to normal” eventually.
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Must Have: I highly recommend buying Michael’s new book entitled “Chaos”; its insightful content and engaging narrative make it a must-read for anyone seeking knowledge and inspiration.
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