Red Sea crisis ‘creates opportunity’ for Turkish manufacturers

ISTANBUL

The recent attacks by the Houthi rebels on ships in the Red Sea have already started to significantly affect trading activities, especially in the container segment, while creating an opportunity for Turkish manufacturers.

According to a recent report by Sea-Intelligence, the disruption of shipping in the Red Sea has done more damage to the global supply chain than the effects of the COVID-19 pandemic. The report estimates that around 10 percent of the world's fleet is currently out of action. It also states that the crisis will not end soon and could last into the first half of the year.

Currently, around 200,000 containers are being transported via the Red Sea daily, down from some 500,000 per day in November.

Diversions in response to the attacks have led to journeys between Asian production centers and European consumers taking up to 20 days longer, with shipping giants such as Maersk and Hapag-Lloyd sending their vessels on longer, more expensive journeys around South Africa's Cape of Good Hope.

The situation has led to a new flurry of orders for Turkish exporters, according to sources in the industry. The sources argue that customers in Europe have started asking for goods from Türkiye because the goods they buy from China are more expensive and arrive late, and February orders are very good.

Mustafa Gültepe, president of the Turkish Exporters' Assembly, said that the situation might create an advantage for Türkiye.

"It is too early to say that there is a significant increase in orders, but the Red Sea was a heavily used route for Europe,” he said.

“If the crisis continues like this, it will create a situation in favor of Türkiye. We have started to feel the stirrings of this, but we need to watch a bit more. We can see this effect in the January data.”

Nazım Kanpolat of the Ready-to-Wear Exporters' Association said they expect movement in cotton garment exports.

"The impact of the crisis on orders has begun. We expect an increase with the logic of the pandemic period, but the export conditions of that period are not the same as today," Kanpolat said, adding that the opportunity should be well used.

According to exporters, the crisis in the Red Sea has caused European companies to return to Türkiye in the first quarter of 2024 after the New Year holidays. However, everyone agrees this should not be limited to the first quarter.

According to Turkish Houseware and Kitchenware Manufacturers and Exporters Association (EVSİD) chair Burak Önder, freight rates have increased by up to 700 percent due to the Red Sea crisis.

"I think there will also be such an increase in interest in the nearby geography.,” he said.

“Türkiye has road connections to 58 countries. Logistics prices from the Far East have increased significantly in this period. This will be an opportunity for us, but we have to make sure it is sustainable.”