In the ongoing Red Sea conflict, the Houthis, a rebel group in Yemen, have taken a central role. Controlling the western part of Yemen, including the Red Sea coast, the Houthis are politically independent but receive support from Iran. Recently, they declared war on Israel at the end of October, putting ships in the Red Sea at risk.
Initially, the Houthis claimed that only ships headed to Israel would be targeted. However, the situation has escalated, with vessels flagged for other countries being attacked, disrupting trade routes in the region.
One significant consequence of the conflict is the disruption in the shipment of coconut charcoal briquettes. Targeted ships are now compelled to take a detour all the way to Madagascar, increasing the transportation distance and, consequently, the cost of shipment. This detour is a necessary measure to mitigate the risks posed by the Red Sea conflict.
As a result of the conflict, the entire supply chain for coconut charcoal briquettes faces additional costs. To address this issue, negotiation with suppliers becomes crucial. Informing importers about the increased prices is essential, considering various aspects like cargo ship taxes, pallet costs, and other associated expenses.
Cargo Ship Tax: Due to the heightened risks in the Red Sea, cargo ship taxes have surged. Importers need to understand that these increased taxes contribute to the overall rise in shipment costs.
Pallet Expenses (Optional): The detour to Madagascar and the associated risks also brings an increase pallet expenses. If you are an importer and you need to use pallete, negotiating with forwarders and suppliers to share this burden helps maintain a fair and sustainable business relationship.
Risk Mitigation Measures: It’s important to communicate the need for implementing enhanced security measures during transportation. These measures, while incurring extra costs, are crucial for safeguarding the shipment against potential threats.
The Red Sea conflict involving the Houthis has far-reaching consequences, extending to the shipment of coconut charcoal briquettes. Navigating these challenges requires transparent communication with buyers and a collaborative approach to negotiating additional costs. In a world where geopolitical events impact global trade, adaptability and open dialogue are essential for sustaining businesses through unforeseen challenges.
Hope this article helps.
