Electronic goods prices rising amid tensions in Red Sea

ISTANBUL

Problems in the Red Sea are estimated to cost an additional $2 billion to Türkiye as personnel costs and prices of certain goods, especially electronic goods, are rising due to the Houthi attacks on ships in the waterway, according to the business associations.

Since Yemen’s rebel group started its assaults, personnel costs have increased by 30 percent, while freight costs have gone up by 30 percent.

“All of this means an additional $2 billion cost to Türkiye,” said Fatih Şener, vice president of the International Transporters’ Association (UND).

After the attacks began, container vessels are opting to go around the Cape of Good Hope in Africa, a longer and more costly trip.

UNCTAD, the U.N.’s trade body last week said that the trade volume going through the Suez Canal dropped by 42 percent over the last two months.

As shipping companies avoid the waterway, prices of some goods in Turkish are rising, according to the representatives from the industry.

The cost of containers delivered to Türkiye from Asia has increased between $3,500 to $4,000, said Şener.

“It may look like the companies are shouldering this additional cost, but in fact, those additional costs are passed onto consumers in the domestic market.”

He also complained about longer delivery times, which have increased from 20 days to 50-55 days.

International freight costs were up around 20 to 60 percent in the first week when the Houthi attacks started, but they are now nearly 300 percent higher, according to Başaran Bayrak from İMEAK, a chamber of shipping.

“Due to higher costs, electronic goods prices have increased between 20 to 25 percent in the Turkish market,” Bayrak said.

Personnel cost of a ship per month has risen from $100,000 to $120,000, while global freight costs have increased by around 30 percent, according to Bayrak.

A ship now has to pass through Gibraltar to reach the Turkish port of Mersin, which adds roughly one month extra to voyage time.

The Suez Canal, a critical waterway connecting the Mediterranean Sea to the Red Sea and a vital route for energy and cargo between Asia and Europe, handled 12 percent to 15 percent of global trade in 2023, UNCTAD said.

The Houthis have been at war with a Saudi-led coalition backing Yemen’s exiled government since 2015, support the Palestinians and have vowed to keep attacking until the Israel-Hamas war ends.

Since November last year, the rebel group has launched dozens of attacks on shipping through the waterways leading to the Suez Canal.