Global logistic companies are on edge as a new political and military crisis could cause a  blockade in the Red Sea and the Suez Canal, and this, in turn, could lead to a massive logistic disaster, as goods and commodities are forced to travel via the old route of the Horn of Africa and keep going, surrounding the continent and wasting precious time and fuel. 

The Suez Canal represents a crucial route for trade between Europe and Asia, linking the Mediterranean Sea with the Red Sea. Now, however, cargo ships could stop passing through this area, and, as a result, worldwide logistics would be heavily affected. 

Yemen, one of the countries that controls access to the Red Sea, has been struggling with a civil war since 2014. Now the Ucranian war has increased the Yemeni civil war to a boiling point, as the country lost access to the grain and food it used to buy from Ucraine. 

Thus, the fighting in the Red Sea that borders Yemen began to increase in both intensity and frequency in November and has now reached a point where Houthi militias, allegedly backed by Iran, attacked the merchant ship Galaxy Leader (linked to Israel). 

The perfect storm

Subsequently, the organization communicated that any Israeli ship passing through the Red Sea would be attacked, and, since November, any ship passing through this area, from whatever source, has been attacked with missiles or drones, and they have even tried to take control of some.

Among the shipping lines that have decided to abandon the route to avoid further incidents are:

Hapag-Lloyd AG, one of Germany's leading container carriers, has decided to stop its Red Sea routes after suffering numerous attacks by the Red Sea militia.

Swiss giant MSC has been another to suffer missile attacks on one of its cargo ships. They will stop routes through that area until the situation is calmer.

Maersk, a leading Danish shipping company, has also announced its intention to change routes after suffering an attack on one of its shipping containers.

The French shipping operator CMA CGM has also decided to suspend navigation in this sea area for the time being.

Why is so vital the Suez Canal? 

The Suez Canal stretches 193 kilometers and is responsible for approximately 12% to 15% of global trade. This situation has generated considerable revenues for several countries in the region that benefit from this commercial activity. 

In addition, we must remember that the Suez Canal is one of the main routes for European companies' supply chains. The decision to temporarily suspend this route by four shipping lines will halve the daily traffic of around 50 ships.

The shipping lines are going to make a change in their logistics routes to avoid passing through the Red Sea. 

For example, one route took an average of 25.5 days to ship goods from Taiwan to the Netherlands, and, according to the BBC, taking alternative routes would take ships approximately 34 days. The increase in working days and fuel costs will lead to higher prices for many consumer goods in Europe.

If the Suez Canal and the Red Sea routes are not available or secure, prices will surely skyrocket in Europe as many goods become scarce and fuel - and any oil derivatives - also disappear from the European markets. 

The post The Suez Canal and Red Sea crisis could cause a massive logistic disaster appeared first on Cross-Border Magazine.

Amazon plans to lay off approximately 10,000 people in corporate, marketing and technology jobs starting as soon as this week. If the numbers are correct, this will be the largest layoff in the company’s history.

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The news transpired last week via multiple media outlets, to a mix of disbelief and alarm, due to the fact not even Amazon remains untouched in the midst of this massive global tech companies crisis. 

Bezos' company, so far one of the few tech companies to have relatively surfed the wave of sales reductions affecting the entire e-commerce panorama, has now joined the ranks of Twitter, Meta, Stripe, Salesforce, Microsoft, and Robinhood among many others. 

Amazon devices, human resources, and retail will be hit harder 

The cuts will focus on Amazon’s devices organization, including the voice assistant Alexa, as well as at its retail division and in human resources, said the people, who spoke on condition of anonymity to the New York Times, because they were not authorized to speak publicly.

The total number of layoffs remains to be defined, as it will most likely be run team by team, rather than all at once, as each business unit or team finishes its yearly plans and gets its results reviewed by corporate. 

But, if the number remains close to the initial figure of 10.000, these massive layoffs will represent 3% of the total Amazon corporate workforce, and less than 1 percent of its global workforce of more than 1.5 million, which is primarily composed of hourly workers.

Amazon’s planned retrenchment during the critical holiday shopping season - when the company typically has valued stability - shows how quickly the souring global economy has put pressure on it to trim businesses that have been overstaffed or underdelivering for years.

Microsoft also jumps into the ‘layoffs wagon’  

Another key indicator that the layoffs situation is not a particular issue of a few companies, is the fact that last month Microsoft also announced layoffs for nearly 1,000 employees worldwide. 

While significant, the job losses affected less than one-half of 1% of the company's 221,000 employees worldwide.

The job cuts came across different positions, levels, and geographic regions, Microsoft confirmed.

"Like all companies, we evaluate our business priorities on a regular basis, and make structural adjustments accordingly," the company told ABC News in a statement. "We will continue to invest in our business and hire in key growth areas in the year ahead."

All in all, it seems clear that the tech and e-commerce sector will be entering a global recession during 2023. 

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