With the Red Sea crisis roiling shipments of everything from cars to energy, it¡¯s only a matter of time before soaring costs and supply-chain strains show up in companies¡¯ earnings reports.
Several firms are already warning of the impact. Electric vehicle maker Tesla plans a two-week production halt at a German plant due shipment delays, while Sweden¡¯s Volvocar AB has announced a three-day stoppage at its Belgian factory. British retailers Tesco, Marks & Spencer Group and Next have all flagged the risk of higher prices for consumers.
This is due to at least 2,300 ships taking lengthy detours to avoid Houthi militants¡¯ attacks in the Red Sea ¡ª a waterway that normally handles over 12% of global sea trade. Central bankers are warning of an inflation surge that could hamper interest-rate cuts. For many companies, especially in Europe, it¡¯s adding to transit times, padding out freight bills and raising insurance costs. It¡¯s also forcing analysts to rethink companies¡¯ earnings estimates for the coming year.
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