Yemen based Houthi attacks on shipping in the Red Sea are having a significant impact on world trade with Japanese automaker Suzuki Motor Corp forced to declare a one-week suspension of production at its Hungarian plant in January due to supply chain disruptions.

Two leading Japanese operators — NYK Line and K Line — have suspended sailings via the Suez Canal and their decision means nearly all big car car-carrier operators have now switched their Asia to Europe services to the longer route round the Cape of Good Hope. This adds seven to 10 days to the normal voyage time of about four weeks between Shanghai and northern Europe.

This geopolitical turbulence goes beyond manufacturing setbacks, but specialist insurance can play a pivotal role in mitigating unforeseen supply chain disruption.

According to a report titled "Shipping Chaos in the Red Sea Puts Pressure on Chinese Exports" published by the thinkchina platform, it is estimated that an astounding £95 billion ($120 billion) worth of Chinese imports and £126 billion ($160 billion) in Chinese exports pass through the strategically significant Bab al-Mandeb Strait annually.

Production Halts and Supply Chain Turbulence:

Suzuki's decision to halt production in Hungary is a direct consequence of the Houthi rebel group's targeting of commercial ships, causing delays in the delivery of Japanese made engines to the plant which manufactures two SUV models - the Vitara model branded the Escudo in Japan and the S-Cross.

This disruption isn't unique to Suzuki; other automakers, including Tesla Inc. and Volvo Car, have also experienced production pauses in Europe due to a shortage of parts, due to the geo-political nature of the Houthi attacks . Accordingly, businesses must look to Political Risk Insurance which offers protection against losses resulting from political events such as war, civil unrest as well as terrorism, or certain actions taken by foreign governments.

Comprehensive Political Risks Insurance can mitigate these uncertainties. Companies engaged in global transactions can also use this coverage to protect against non-payment or delays in payment due to geopolitical events.

Collaboration with Insurance Brokers:

In navigating the complex landscape of insurance, companies can benefit significantly from collaboration with a specialist insurance broker, particularly a broker with a direct access to the Lloyd’s insurance market in London. W Denis is a Lloyd’s broker and able to procure market leading and comprehensive risk solutions for companies based worldwide. To discuss this further please contact Daniel Moss at daniel.moss@wdenis.co.uk or W Denis Europe:

Eastern Europe

Vida.Jarasiunaite@wdenis.eu

Southern Europe

Christos.Hadjisotiris@wdenis.com

Western Europe &/or elsewhere worldwide

Mark.Dutton@wdenis.com