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Elon Musk’s Tesla and Volvo Car, owned by Geely, have announced they are halting some production in Europe due to parts shortages. This is one of the first visible effects of the Houthi rebel attacks on shipping in the Red Sea on manufacturers, writes the Reuters agency.
Tesla will largely halt production at a factory near Berlin from January 29th to February 11th. The reason is precisely the lack of components caused by the redirection of ships to the route around the southern tip of Africa. Reuters reports that Volvo Car will halt production in Ghent, Belgium, for three days next week due to a three-day delay in the delivery of transmissions.
The United States and Britain launched a series of strikes on Thursday against the Iran-backed Houthi militia, whose attacks on international shipping since November have crippled one of the world’s most important sea routes.
Container shipping rates rose again this week. They responded to growing concerns that ships carrying everything from clothing to car batteries would have to avoid the Suez Canal, the fastest route from Asia to Europe, for longer than expected, the agency said.
According to Reuters, there is a risk that higher prices for freight transport and oil could cause inflation to rise again. 12% of global traffic flows through the Suez Canal. Low water levels caused by the drought, which has restricted the Panama Canal, another key trade route, are not helping the logistical problems.
According to Sam Fiorani of AutoForecast Solutions, which tracks supply chains and auto manufacturing, the Red Sea conflict could affect other automakers in the future. “You can’t believe that they (automakers Tesla and Volvo) are alone, they are just the first to recognize this problem,” he tells Reuters.
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