Red Sea crisis – Impact on retailers & supply chains to be more acutely felt in coming weeks

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Though the Red Sea crisis has been going on since last year, the impact is likely to be much more acutely felt in the coming weeks and months. Several companies have already advised customers of supply chain delays impacting orders and reducing stock availability. Many vessels have been drifting (i.e. at sea without using fuel) awaiting further instruction, but that is not something that can be continued indefinitely, and so most are now taking the longer route around the Cape of Good Hope adding an average of two weeks to the sailing time. Businesses need sight of when shipments are arriving and must manage the stock they have accordingly.

For retailers, this can impact what promotions they put in place and where they disseminate goods regionally once they arrive on-shore. For fashion retailers, for example, whole seasons’ worth of sales could be lost. Businesses therefore need supply chain management solutions that monitor the movement of vessels, potential chokepoints, stock availability, consumer buying behaviour and general forecasting that will help alleviate these current pain points.

For now, the situation is manageable, yet cannot afford to continue indefinitely. If it does, this is likely to have much more serious consequences on the global supply chain we all rely on so heavily, and also accelerate any plans businesses may have to introduce more nearshoring for future goods.