Will we run out of goods from Asia? The crisis in the Red Sea will finally hit Poland

Luc Williams

Experts warn that if the crisis in the Red Sea continues, its consequences will also affect economies in Europe, including Poland.

“Crisis causes increase in sea freight pricesbut it is less noticeable for the final recipients of goods, because in 2021 – at the peak of the pandemic crisis – freight prices were even higher,” says Przemysław Hołowacz, development director of the CSL Group, member of the Northern Chamber of Commerce in Szczecin and the Chamber of Industry and Poland-Asia Trade.

There will be no shortage of electronics from Asia for now

We ask Hołowacz about the delay with which freight problems will become visible to Polish consumers.

“The date when Poland and Europe will start to feel the crisis is a great mystery for entrepreneurs for a simple reason: we do not know how long this transport crisis may last. Entrepreneurs are prepared for alternative actions and I expect that there is no risk of, for example, electronics stores running out of goods,” says Hołowacz in an interview with Forsal.

“Nevertheless, some companies are already deciding to place additional orders, even if they were limiting purchases a few months ago, citing lower demand and full warehouses,” he adds.

These stocks concern primarily the trade and logistics sector. Companies, seeing a significant increase in inflation in 2022, stockpiled goods – electronics, electronics/home appliances, multimedia, but also production raw materials, such as cellulose. In 2023, there were fewer orders, and now – as Hołowacz explains – we can observe “emptying warehouses” and ordering more goods to avoid a crisis.

It will be more expensive, up to 10%.

And although, according to specialist opinions, shelves with goods from Asia will not be empty, you should be prepared for an increase in prices of products imported from distant Asian markets – China, Japan, Korea, Taiwan, Bangladesh and India.

“Freight costs are already rising, and it is only a matter of time before they will be felt by trade and entrepreneurs. The expected price increase is estimated at at least several percent. I expect increases to approximately 10 percent.” – forecasts Przemysław Hołowacz.

Price increases they may be most noticeable in the case of goods that are most often ordered to Europe from Asia.

“So it may be at risk electronics and multimedia. Less clothing, for which demand has recently dropped. We are also concerned about the prices of raw materials arriving in Europe by sea,” the expert tells us.

Transport companies will also suffer

As transport-forwarding-logistics (TSL) market experts say, the current situation is becoming burdensome for logistics around the world, and crisis in the Red Sea means blocking the free flow of transport, which must have an impact on world trade.

Hołowacz points out that although freight transport via Suez Canal and the Red Sea still takes place, it is riskier and, as a result, very limited and more expensive.

“The largest economies in the world should be interested in ending the crisis as quickly as possible, before it becomes more felt in Europe. At the moment, the impact of the crisis in the Red Sea on trade freedom is small, but this may change in the coming weeks,” says the CSL Group expert.

Logistics problems may also translate into the financial stability of companies that transport and distribute goods from Asia. Some of the goods were ordered before the disruptions, and the payment does not take into account the increased transport costs.

“This situation certainly affects the condition of many companies around the world. Passing through the Suez Canal is so difficult that we receive information about, for example, the need to sail around Africa, which increases the delivery time by up to a dozen or so days. It is obvious that this involves an increase in costs,” Hołowacz points out.

Maritime transport logistics under pressure

Specialists also indicate that transport crisis in the Red Sea translates into the entire maritime transport logistics chain. The situation related to, for example, planning and implementation of reloading and unloading is becoming more demanding.

“At the moment, there is no concern that goods will not arrive at the ports. However, we are afraid that congestion may occur in ports because it is more difficult to plan the unloading time,” explains Hołowacz, adding that we should not expect consequences as serious as the total blockage of the Suez Canal that we experienced. during a pandemic or during a ship breakdown that blocked the canal.

Apart from trade, the energy sector will be most affected by the crisis. This may translate into: increase in oil and gas prices.

They have been going on for several weeks attacks by Yemen’s Houthi rebels on cargo ships and container ships transiting the Red Sea. In response, the US and British troops decided to intervene by force. The transport of goods through the Red Sea – which, together with the Suez Canal, is the main sea route connecting Europe with the Middle East and Far Asia (including China, Japan, Korea and Taiwan) – is very difficult.

About LUC WILLIAMS

Luc's expertise lies in assisting students from a myriad of disciplines to refine and enhance their thesis work with clarity and impact. His methodical approach and the knack for simplifying complex information make him an invaluable ally for any thesis writer.