Japanese trading firms wary of rising transport costs in Red Sea

Japan's major trading houses are becoming increasingly wary of rising transportation costs due to recent attacks on ships in the Red Sea by Yemen's Houthi rebels.

Sumitomo Corporation says costs may rise as it avoids the Red Sea route and detours around the Cape of Good Hope in South Africa when shipping steel materials and chemicals from Asia to Europe.

It is now placing some orders earlier than scheduled given the longer shipping times, and is also considering air transport for some products.

CFO Morooka Reiji said at an online news conference on Monday that the firm's supply chain for Europe is limited. But he said it intends to cooperate with clients and suppliers to ensure the situation will not negatively affect their businesses.

Toyota Tsusho Corporation also expressed concern about rising costs due to the need for alternative routes when shipping auto parts to its production bases near Turkey. The company added that any hikes in boat fares in Africa and elsewhere would affect its business through the end of fiscal 2024.

CFO Iwamoto Hideyuki said at an online news conference that the situation surrounding the Red Sea route has yet to influence its recent business performance. But he said higher costs could affect business results for the three-month period through March and through fiscal 2024.