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Suppliers Reroute Cargo Amid Shipping Upheaval

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Toymaker Basic Fun and other suppliers for major retailers such as IKEA, Home Depot, and Amazon are rerouting cargo away from the Suez Canal following attacks on vessels in the Red Sea. Basic Fun usually ships all Europe-bound toys from its China factories via the Suez Canal, but Yemeni Houthis’ drone and missile attacks in the Red Sea have upended the company’s plans. Basic Fun is now working through the holidays to send toys from China to ports in Britain and the Netherlands via the longer route.

The situation has prompted a scramble to reserve space ahead of the early February deadline to get goods out of China before factories there close for the extended Lunar New Year celebrations. The diversions are expected to cause a shortage of vessel space, strand empty containers needed for China exports in the wrong places, and send short-term transport price indexes sharply higher. The biggest impact is likely to come over the next six weeks, with vessel owners already rationing the less expensive, contract-rate space they reserve for customers. The situation demands urgent international attention and action to address the shipping upheaval and the dire humanitarian crisis in the region.

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