The supply crisis after the pandemic disrupted many plans in companies, including those in Valencia. If not, look at the automobile industry, where the lack of components is still rampant. But precisely from the lessons that the industry drew after these unforeseen events, reorganizing and diversifying its suppliers, is where it will draw its strengths to overcome the crisis due to instability in the Red Sea.
It is one of the conclusions of the report prepared by Cámara Valencia on the implications for the Valencian economy of attacks on ships in the Red Sea, the main trade route between Asia and Europe, through the Suez Canal.
The Valencian chamber maintains that the supply chain crisis of just two years ago forced Valencian businessmen to carry out a process of diversification of their suppliers and better manage supplies and that, therefore, the supply problems that generates this conflict will impact “with less intensity on industrial and commercial activity.”
Nor does Cámara Valencia expect “big changes” in the evolution of Valencian exports to Asian markets, as it argues that these will continue on a downward path, except for markets such as India and some Southeast Asian countries, such as Taiwan and Singapore, which for their part dynamism considers that they will maintain their upward behavior.
But both assessments of the situation do not prevent, according to the logistics lobby Propeller Valencia, that there is no future increase in the shipping time of goods between Asia and Europe, “with the consequent effects on the logistics chain, the scheduling of stopovers in the different ports and the increase in costs for all the parties involved, including the shipping companies themselves”.
Said Association of logistics managers and entrepreneurs explains to La Vanguardia that the presumed increase in costs will end up being reflected in freight rates and, therefore, it will be the importing and exporting industry that “will end up paying the extra cost first.” For its part, Cámara Valencia recalls that the level of freight had been reduced in the last year to pre-pandemic levels. “Marine transport costs are going to increase, but they will be far from the 2021 highs. Their impact on final prices will be moderate and will not be noticed until the second quarter of 2024,” he predicts.
Propeller Valenciana understands that the exchange of goods between Europe and Asia will become more expensive, and that will also have an impact on those who work through the Port of Valencia, since according to its figures, China alone represents 15% of Valenciaport’s total container traffic. And they focus on the container traffic figure between Valencia and China: in the cumulative period from January to November 2023 it was 503,795 TEUs (20-foot containers), compared to 203,201 TEUs in the commercial exchange between Valencia and India.
When asked if this could lead to transport collapses, the lobby dismisses the matter and considers that these are not expected to occur. “The ships will continue to arrive regularly and at intervals, not all at once,” they clarify.
The president of the Port of Valencia, Mar Chao, spoke along the same lines on Monday, considering that the situation of the routes that cross the Red Sea “should not affect the Port of Valencia too much.” “Surely we are less affected than other ports that are closer to the conflict zone.” All in all, she recognizes that this is an issue that “we are obviously piloting and following directly, knowing that right now” everyone is watching how the routes are reconfigured, “she added.
