DHL CEO says Red Sea disruption could lead to shipping container shortage
Further trade issues brewing due to Red Sea shipping woes, DHL chief warns
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DHL chief executive Tobias Meyer on Wednesday warned the ongoing disruptions to global trade caused by Houthi rebel attacks in the Red Sea could lead to shipping container shortages in Asia in the coming weeks.
Meyer said during a panel discussion in Davos that such a shortage could occur because a sufficient amount of containers may not be transported back to Asia.
Tobias Meyer, chief executive officer of DHL Group, speaks during an interview in Hong Kong on Nov. 14, 2023. (Paul Yeung/Bloomberg via / Getty Images)
"We have to keep an eye on that," he said, while adding that the current disruptions cannot be compared to the supply chain difficulties from three to four years ago at the onset of the COVID-19 pandemic.
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In the latest update on the Red Sea situation on DHL's website from last week, the company warned "shipping costs are increasing in significant trade routes for the foreseeable future" as every major shipping line has suspended services in the Red Sea and is sending their vessels around Africa's Cape of Good Hope, adding roughly two weeks to shipping times.
The headquarters of DHL, the world's largest global delivery company, on March 14, 2006, in Bonn, Germany. (Ralph Orlowski / Getty Images)
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| DHLGY | DEUTSCHE POST AG | 43.685 | +0.77 | +1.78% |
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"[E]quipment issues are beginning to emerge and are expected to worsen," DHL warns on its website. "This is due to vessels not returning to Asia on time, resulting in a shortage of available equipment for future shipments."
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Since November, Iranian-backed Houthi rebels in Yemen have launched dozens of missiles and drones at commercial vessels around the Red Sea. They are claiming to avenge the Israel counteroperation in Gaza against Hamas terrorists in response to the Oct. 7 attacks. The Houthi attacks have grown increasingly indiscriminate and have even imperiled tankers and container ships moving sanctioned Russian oil.
A Houthi fighter stands on the Galaxy Leader cargo ship in the Red Sea in this photo released Nov. 20, 2023. (Houthi Military Media/Handout via / Reuters Photos)
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The Houthi attacks provoked a U.S. military response, with President Biden ordering airstrikes on military targets in Yemen. The Biden administration is currently considering whether to reverse a 2021 decision to remove the foreign terrorist organization (FTO) label imposed on the Houthis by the Trump administration.
FOX Business' Chris Pandolfo and Reuters contributed to this report.