Adidas CEO expresses Red Sea disruptions cause delays, higher costs

Variety and Tech
01-02-2024 | 04:27
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Adidas CEO expresses Red Sea disruptions cause delays, higher costs
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Adidas CEO expresses Red Sea disruptions cause delays, higher costs

Shipping disruptions in the Red Sea are negative for gross margins, Adidas CEO Bjorn Gulden said on Thursday in a call with analysts, adding that "exploding" freight rates are driving up costs and shipping delays are causing some delivery issues.

"Currently the spot rates are exploding again," Gulden said. "We have contracts that go through the summer but if we need to ship more than what the contract says or we need to accelerate something, that now has a pretty high premium."

Shipments are currently delayed by about three weeks, which he said is causing some "delivery issues" especially to Europe.

Shipping firms are avoiding the Suez Canal due to attacks on shipping in the Red Sea area and rerouting around the southern tip of Africa, delaying the arrival of clothes and shoes in Europe from factories in Asia.

Gulden said he does not see the disruption continuing for a long time, and the impact on margins will not be huge.

Reuters
 

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