Target, a major U.S. retailer, is facing shipment disruptions from India and Pakistan, significant regions for apparel manufacturing. The source, familiar with the situation, informed Reuters on Friday that these disruptions are a result of the crisis in the Red Sea. However, the overall impact is described as “minor.”
The company has experienced delays in the receipt of some shipments due to extended transit times observed by vessel operators. The source indicated that the company is actively working with its shippers to redirect merchandise around the Suez Canal. Furthermore, the additional time and costs associated with this re-routing are anticipated to be minimal.
Attacks on vessels in the Red Sea by the Iran-backed Houthi militia have led to disruptions in trade on one of the world’s most important shipping routes. This situation has added between 10 and 15 days to transit times, as ships opt for the safer route around southern Africa.
“We leverage production and transportation partners across the globe, and the majority of our freight does not travel through the Suez Canal,” Jennifer Kron, a spokesperson for Target said on Tuesday.
“For any freight that’s being routed around the Suez Canal, we’re working with shipping partners on alternative paths,” she added. “Target remains confident in our ability to get guests the products they want and need.”
Some retailers are proactively replenishing their stock of goods and exploring alternative transportation options by air or rail to prevent empty shelves during the spring season. Concurrently, automakers like Tesla and Geely-owned Volvo Car have temporarily suspended some production in Europe due to a shortage of components.
Currently, Target is not considering the use of air freight, as mentioned by the source, even though it employed this method during the pandemic.
During the NRF conference on Sunday, the CEO of FedEx Corp mentioned that the prominent U.S. parcel delivery giant has yet to observe a substantial shift to air freight that would significantly impact its operations.
Target sources a variety of products, including garments, plastic items, toys, and bath products, from suppliers in India and Pakistan, which serve as crucial sources for the U.S. retailer, as per its global factory list. The usual route for shipping these products involves passage through the Suez Canal.
While the Suez disruptions mainly affect Asia-to-Europe trade, about 30% of shipments to the U.S. East Coast go through the canal.
Most of Target’s products, however, come from China and are shipped directly across the Pacific Ocean to West Coast ports, unaffected by the disruptions in the Middle East.
The company is also not seeing any impacts to spring merchandise, the source said.
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