Worldwide shipping disruption 'very bad news' for cycling industry, according to expert

Shipping companies are avoiding the Red Sea, meaning yet more disruption to the struggling bicycle industry

Clock16:00, Wednesday 20th December 2023
Container ships avoid Red Sea as security threat rises

Image by 127071 from Pixabay

Container ships avoid Red Sea as security threat rises

Most of the world's biggest freight firms including Maersk, Hapag-Lloyd and MSC have stopped sending ships along the Red Sea and Suez Canal, as the threat of attacks from Houthi rebels becomes higher and higher. With 30% of global container traffic relying on the Red Sea, it seems highly likely that this disruption will have an impact on global retail, including the bicycle industry.

The Guardian reports that seven out of the 10 biggest shipping companies have suspended operations in the Red Sea, as Houthi rebels from Yemen target Israeli and international ships with missiles, drones and hijack operations.

Instead, ships are being diverted south around the Cape of Good Hope, a diversion that adds up to two weeks to each journey.

As industry expert Jonathan Harker, editor of Cycling Industry News, points out, industry woes are far from the biggest concern in a war with such tragic human cost. Even so, he suggests that this disruption will be the next challenge facing the already struggling cycling industry.

Harker told GCN: "For a market like cycling, already struggling to cope with significant difficulties where we’ve seen major online retailers and trade distributors go into administration, it’s clear there is not much capacity to handle many more challenges. Delays in new model year products reaching the market is bad enough, but stock stuck on container ships also means cash stuck on container ships. Given the liquidity challenges, that’s very bad news for the market.

"The cycle industry won’t be the only market hoping for a swift resolution to this, but likely will be among the sectors that will be hardest hit by this latest supply chain disruption."

This latest issue in the Red Sea calls to mind the 2021 incident in the Suez Canal, when a container ship ran aground leading to global disruption. The BBC reported that the blockage held up $9.6 billion of goods every day. Before that, there was the COVID-19 pandemic, in which a combination of increased demand for cycling products and reduced availability of shipping sent prices for consumers skyrocketing.

Harker suggests this latest disruption will reignite the "on-shoring or re-shoring" discussion; the question of whether our global manufacturing model and reliance on the Far East is still viable.

Long term, this disruption might give bicycle retailers a reason to rethink how they build, store and sell bikes. Short term, it will give them yet another financial headwind to weather.

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