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 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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