The ripple effects of the escalating Middle East conflict are beginning to surface in global supply chains.
The ripple effects of the escalating Middle East conflict are beginning to surface in global supply chains, with major e-commerce giants and logistics companies warning of potential delivery delays and rising consumer costs.
Reports indicate that items from e-commerce giants such as Temu, Shein, and Amazon may take longer than usual to arrive at recipients’ locations, regardless of location. This is as the Strait of Hormuz, one of the world’s most important shipping routes for oil and goods, was closed because of rising military tensions and attacks linked to the Gulf States.
Disruptions to key shipping routes and heightened geopolitical risk have increased freight charges, insurance premiums, and transit times, forcing companies to pass some of these costs on to customers.
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Precautionary measures by Amazon
An Amazon spokesperson told The Citizen on Tuesday that the company has put in place precautionary measures, as the safety of its employees and partners is a priority.
“We are adjusting operations in response to the evolving situation, including temporary pauses where necessary,” said the spokesperson. “The safety of our employees and partners remains our top priority, and we are working closely with local teams and local authorities to ensure they are supported.”
This comes after two of Amazon’s data centres in the United Arab Emirates (UAE) and a facility in Bahrain were damaged by drone strikes, taking the facilities offline. CNBC reported the incident occurred Sunday morning, with the company posting to its AWS health dashboard at the time that “objects” hit data centres in the UAE, causing “sparks and fire”.
Delay in Amazon’s delivery
The Citizen also asked the American e-commerce giant whether it would experience any delays in delivering items, but this wasn’t answered.
However, according to AFP, Amazon has extended its delivery period by at least 10 days. The publication reported that some products on Amazon show delivery timelines of 35 to 45 days, whereas deliveries usually arrive in less than 35 days.
The ongoing conflict may lead to further delay if it lasts longer.
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Cars get delivered through the route
Despite the Strait of Hormuz being key to the world energy markets, analysts believe that cutting off access, as Iran has threatened to do, will not affect the major Asia-Europe shipping route, with the Gulf ending in a cul-de-sac by the shores of Kuwait, Iraq and Iran.
But the strait is essential to all regional trade as it allows access to Dubai’s Jebel Ali port, the world’s 10th-largest container port and a redistribution hub for more than a dozen countries in the region.
Besides oil, Germany ships cars, machinery and industrial products via the route, while France mainly sells cereals and agricultural products, cosmetics, luxury goods and pharmaceuticals.
However, since Israel and the US launched strikes on Iran over the weekend, global shipping companies have ordered their cargo to be rerouted.
Chinese e-commerce giants
The Citizen, with no success, reached out to Temu and Shein to determine whether they anticipate any delivery delays or cost increases.
However, AFP reported that Temu and Shein have warned of delays of several days.
Two global shipping and logistics companies told customers they will introduce an extra charge on cargo as a result of the war. CMA CGM has introduced an ’emergency conflict surcharge’, and Hapag-Lloyd has introduced a ‘War Risk Surcharge’.
The two global shipping companies, including Maersk, are among the firms rerouting their shipments through the Cape of Good Hope, resulting in delays.
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