The chemical sector in Germany, the largest in Europe, is beginning to feel the impact of shipping delays across the Red Sea, becoming the latest industry to raise alarms over supply disruptions that have forced some companies to curb production. The arrival of significant Asian imports in Europe, from automotive parts and engineering equipment to chemicals and toys, is currently taking longer after shipping companies rerouted vessels to bypass the Red Sea and the Suez Canal in the wake of attacks by the Houthis.
Germany's chemical sector, which is the third-largest industry in the country after automotive and engineering, with annual sales of around 260 billion euros ($282 billion), relies on Asia for about a third of its imports from outside Europe. The shipping crisis in the Red Sea comes at a time when the German economy is already under pressure from recession and rising labor and energy costs. According to S&P Global, the chemical sector in Europe, alongside automotive and retail, is considered the most vulnerable.
In addition to import delays, stakeholders in the chemical sector point to rising fuel costs, as the arrival of tankers carrying essential raw materials now takes about 14 extra days. They indicate that these costs can only be partially passed on to customers.
