Target seeing some disruption of India supplies due to Red Sea crisis

By Siddharth Cavale

NEW YORK (Reuters) -U.S. retailer Target is experiencing some disruptions of shipments from India and Pakistan, a big region for apparel manufacturing, due to the crisis in the Red Sea, a source familiar with the matter told Reuters on Friday, calling the effect “minor” overall.

The company has faced delays in receiving some shipments, in line with the extended transit times that vessel operators are seeing, as it works with its shippers to redirect merchandise around the Suez Canal, the source said, adding the extra time and costs associated with re-routing were expected to be minimal.

Attacks on vessels in the Red Sea by the Iran-backed Houthi militia have disrupted trade on one of the world’s most important shipping routes, adding between 10 and 15 days to transit times as ships take 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 stocking up on goods and seeking air or rail alternatives to avoid empty shelves during spring, while automakers Tesla and Geely-owned Volvo Car have suspended some production in Europe due to a shortage of components.

Target is not thinking about using air freight at the moment, the source said, though it did so during the pandemic.

FedEx Corp’s CEO said at the NRF conference on Sunday that the U.S. parcel delivery giant has still not seen much of a shift to air freight to have an impact on its operations.

Target gets garments, plastic, toys and bath products among other things from suppliers in India and Pakistan, which are important sources for the U.S. retailer, according to its global factory list. These products are typically shipped 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.

(Reporting by Siddharth Cavale in New YorkEditing by Cynthia Osterman and Mark Potter)