Growing tensions in the Red Sea are having their first tangible repercussions on global trade. Electric car maker Tesla announced Thursday that it would suspend most of its production for two weeks at its European factory near Berlin, citing a shortage of parts due to the lengthening of transport routes due to the attacks. in the Red Sea.
“The considerable lengthening of transport times creates a gap in supply chains,” writes Tesla in a press release sent to AFP. Production will be suspended, “with the exception of a few subsectors”, in the “Gigafactory” located south-east of Berlin between January 29 and February 11, adds the American manufacturer. “From February 12, production will resume in full,” assures Tesla.
Since the start of the war between Israel and the Palestinian Islamist movement Hamas in the Gaza Strip, the increase in attacks near the strategic Bab el-Mandeb strait, separating the Arabian Peninsula from Africa, has pushed certain shipowners to circumvent the area. According to Tesla, “armed conflicts in the Red Sea and the shift of transport routes between Europe and Asia via the Cape of Good Hope also have repercussions on production in Grünheide”, the town south of Berlin where Tesla opened its only European factory.
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The Suez Canal, which connects the Mediterranean to the Red Sea, constitutes the shortest maritime route between Asia and Europe. It is one of the main highways of ship traffic through which 12% of world trade passes. The alternative route that container ships must take around South Africa’s Cape of Good Hope is much longer.
This security crisis is a shock for global maritime trade. In addition to extending the journey between Asia and Europe by 10 to 20 days, this detour involves significant costs for businesses. Some 11,500 employees work in the Tesla factory near Berlin, opening in 2022, which produces, according to the company, more than 250,000 electric cars per year with a long-term target of 500,000 units. Tesla plans to expand the factory to double production and the number of employees.
