Since Monday, production at the Ghent factory of Volvo Car has come to a standstill, as supplies got exhausted due to container ships having to choose an alternative 10-day longer route to avoid the Houthi attacks in the Red Sea. Volvo hopes to be able to restart on Thursday.

Earlier, Tesla told Reuters it would suspend most car production at its factory near Berlin from January 29 to February 11, citing a lack of components. In Ghent, some 6 000 are technically unemployed by the disruption in the supply chaines. Other carmakers like BMW, Stellantis, or Volkswagen in Belgium (Brussels) say they are not affected yet.

Too heavy gearboxes

For Volvo Car Gent, the main reason is the supply of gearboxes for the XC40 and V60, two of the three models currently built in Ghent, says spokesperson Barbara Blomme to De Tijd. They’re too heavy to transport by air like some car manufacturers do for small parts, as it would make them unreasonably expensive.

Starting production only for the fully electric C40 built on the same lines would not be economically wise. If production restarts on Thursday, Volvo counts on catching up for the three days of delay in the coming weeks.

So far, it seems Tesla’s gigafactory in Gruenheide is impacted more, as it foresees to close for nearly two weeks at the end of this month.

Adding one million dollars to costs

According to giant shipping company Maersk, the Houthi rebels’ attacks on ships crossing the Red Sea to the Suez Canal force them to take the long route around Cape Good Hope (South Africa) and add about ten days plus around $1 million in extra fuel costs to a journey from Asia to Europe. About 12% of the world’s container shipments typically go through the Suez Canal.

According to Reuters, we see the most significant supply chain upheaval since the Covid-19 pandemic, derailing the global economic recovery, while higher freight and oil prices could reignite inflation.