Attacks in Red Sea likely to impact Turkish consumers
ISTANBUL
The attacks on commercial ships in the Red Sea by Yemen’s Houthi rebels have rerouted a majority of global trade away from the crucial maritime artery for goods and supplies that are likely to impact Turkish consumers through rising prices.
Oil, natural gas, grain and everything from toys to electronics typically travel through the waterway separating Africa and the Arabian Peninsula en route to the Suez Canal, where 12 percent of the world's trade passes.
Shipping container companies are now avoiding the Red Sea and sending their ships around Africa and the Cape of Good Hope, which means higher freight costs.
Traveling around Africa can add a week to travel between Asia and Europe, as well as hundreds of thousands of dollars in fuel costs.
What matters most for Türkiye is what happens with large container ships, said Turkish experts, noting that freight costs have already increased between 20 percent to 60 percent in the past week.
Those increased costs are likely to be passed onto Turkish consumers in the first quarter of next year, they warned.
“There is some sense of panic due to the attacks in the Red Sea and companies’ decision to reroute their ships,” said Mustafa Gültepe, the president of the Türkiye Exporters Assembly (TİM).
The transportation costs of containers destined for the Far East have almost doubled, according to Gültepe.
The freight rate of containers shipped from China to Türkiye has risen to $2,000, said Başaran Bayrak, the president of a chamber of shipping.
“Now a ship has to pass through Gibraltar to reach [the Turkish port of] Mersin, which adds roughly one month extra to voyage time.”
Bayrak noted that production activities in Türkiye are dependent on imported goods and that Türkiye buys intermediate goods from Far Eastern countries.
“Rising import costs will inevitably impact final goods. The prices of import-dependent goods will increase between 10 percent to 20 percent in the local market,” he said.
Türkiye’s imports from China rose by 12.5 percent in the first 11 months of 2023 to reach $41.7 billion, making it the country’s largest supplier of goods.
Türkiye buys mostly communication devices and electrical machines from China.
South Korea, India and Malaysia, which are diverting their ships away from the Red Sea, are among the top 20 countries Türkiye imports goods from.
Ikea said on Dec. 21 that rerouting cargo shops around Africa to avoid possible attacks in the Red Sea could lead to delivery delays and even empty shelves.
In response to the growing impact to global trade, the U.S. and a host of other nations have created a new force to protect ships.
More than 20 countries have joined the U.S.-led coalition, the Pentagon said on Dec. 21.
