Houthi attacks in the Red Sea: Supply problems in the bike industry too?

Supply bottlenecks in the bike industry - wasn't there something? The war between Israel and the terrorist organisation Hamas is taking the issue to the next level. The horror stories from the Middle East also have a direct impact on the two-wheeler industry and our favourite hobby. In recent months, there have been repeated attacks by Houthi militias on ships in the Red Sea - on the classic route for cargo ships from Asia to Europe. Many shipping companies are avoiding the route due to this threat. This results in significantly longer delivery routes and rising costs. We know from several bike manufacturers that bicycles are also affected.

The story is reminiscent of the Ever Given freighter accident in 2021when the bicycle industry experienced real problems due to the transport route through the Suez Canal being cut off. And this was at a time when the industry was already reeling from coronavirus and the associated supply problems. Today, however, the situation in the bike industry is different. The warehouses are full and the availability of components is probably the least of the problems. Instead Reports of sales losses, mass redundancies and insolvency proceedings the round.

Nevertheless, alarming voices are being heard from other sectors. According to consistent media reports, Tesla had to suspend production in Grünheide for several weeks in January due to a lack of supplies of vendor parts. Other large companies such as Aldi and Ikea also fear restrictions in their product ranges. According to the Institute for the World Economy in Kiel, the flow of goods across the Red Sea in January 2024 had collapsed by 66 per cent compared to the expected value. However, an expert from the institute cautiously gives the all-clear:

The situation today is not comparable to the environment during the Evergiven accident in the Suez Canal and the coronavirus pandemic, when lockdowns led to a drastic decline in the supply of goods while demand in Europe skyrocketed. Apart from slightly longer delivery times for products from the Far East and increased freight costs, to which the container ship network should quickly adjust, no negative consequences for global trade are expected. - Julian Hinz, Head of the Kiel Trade Indicator.

The keyword "increased freight costs" is likely to bring back bad memories for bikers and manufacturers. Because during the corona pandemic, this reason was at the top of the list when numerous price increases for bikes and parts were announced. In the current situation, it is hard to imagine manufacturers passing on increased costs to the customer. After all, a veritable price war is currently taking place in the retail sector. Without a substantial discount, hardly any bikes seem to be changing hands at the moment. Also positive for the customer: There should be no shortage of choice at the moment. Brand new products are in stock at most manufacturers and retailers, as is existing material. The shortage of components is also a thing of the past.

What the manufacturers say

The attacks on ships in the Red Sea are affecting our current delivery times. Due to the dangerous situation, many cargo ships are currently taking an alternative route via the Cape of Good Hope. However, this route takes significantly longer than the direct route through the Suez Canal. This is delaying deliveries of our new E-MTB model by several weeks. - Focus Bikes in a press release

Due to the events in the Red Sea, the shipping companies with which the Giant Group works are also adjusting their routes via the Cape of Good Hope. We therefore currently expect a longer transit time from Asia of around 2-3 weeks. The Giant Group has concluded long-term contracts with logistics partners, so our freight rates will remain unchanged in the short term. However, the longer conflicts continue in this region and diversions are therefore still necessary, the more likely it is that shipping companies will pass on the costs when negotiating new contracts. The future development of our logistics costs is directly related to the duration and extent of the conflict in the Red Sea, as well as the need for shipping companies to choose longer alternative routes due to security concerns. - Giant Germany GmbH

Further enquiries are being made to manufacturers - the article will be updated on an ongoing basis.