Fears of prolonged Red Sea shipping crisis fuel inflation fears, as oil, retail cargo delays rise
A screen grab captured from a video shows that cargo ship ‘Galaxy Leader’, co-owned by an Israeli company, being hijacked by Iran-backed Houthis from Yemen in the Red Sea on November 20, 2023. (Photo by Houthis Media Center / Handout /Anadolu via Getty Images)
Anadolu | Anadolu | Getty Images
The ripple effects of the Red Sea diversions have expanded into the energy markets and despite repeated attacks on Houthi rebels by the U.S. and allies, shipping experts say the crisis may linger for months and lead to a cargo container supply crunch.
“So far, it almost seems the Houthi attacks are just increasing,” said Bendik Folden Nyttingnes, a shipping analyst at Clarksons Securities.
In an email to clients, Honour Lane Shipping (HLS) said its carrier contacts are “informally” predicting the Red Sea situation will not be solved for at least six months, and could last up to a year. “If so, we expect the soaring freight rates and equipment shortage will continue till the third quarter,” it advised clients.
Earlier this week, Shell confirmed that its oil tankers are temporarily being rerouted around the Red Sea, with its CEO telling the Wall Street Journal that a 5-10% price impact is anticipated in the short-term.
Kpler’s ship tracking director Jean-Charles Gordon estimates that vessels managed or chartered by Shell that are being rerouted via the Cape of Good Hope can expect an approximate 10-day delay in their estimated time of arrival.
“As several product tanker operators are avoiding the area following the airstrikes on Friday, the longer transit times around the Cape of Good Hope could create a supply shortage of tonnage if the situation continues, which in line could push product tanker rates and stocks higher,” Nyttingnes said.
Torm , Hafnia, Stena Bulk, Hafnia, BP, Frontline, Equinor, Euronav are reportedly among the tanker operators and energy companies choosing to avoid the area following recent warnings. Companies including Tom, Hafnia, Scorpio Tankers and Ardmore would benefit if product tanker rates rose, Nyttingnes said.
These diversions are immediately eating into Egypt’s economy, with its GDP reliant on the Suez Canal, which it owns and operates. The country’s other significant source of revenue, travel, has been decimated because of the Israel-Hamas War.
“If Total Suez Canal tanker transits are over 8 million barrels per day, the losses to the Canal Authority are probably in the range of $5 to $7 million depending on the mix of tankers going through,” said Andy Lipow, president of Lipow Oil Associates.
This would be on top of the revenue lost by diverted container vessels which are required to pay between $500,000-$600,000 per transit. According to Kuehn + Nagel, 90% of container ship traffic bound for the Suez Canal has been rerouted.
50% of all Suez traffic could be rerouted
A drop of 40-50% in all vessel Suez crossings as a result of shipping diversions is possible, according to Ami Daniel, co-founder & CEO of Windward, which could create a situation similar to the Covid supply chain crunch for many retailers reliant on global supply chains.
Logistics CEOs have been warning CNBC that the vessel re-routings would result in container crunches. When vessels are late, the containers on those vessels will be late to be processed and reused again for exports.
Goetz Alebrand, head of ocean freight Americas for DHL Global Forwarding, has been warning about an upcoming container crunch for weeks. “More than 4 million containers (Twenty-Foot Equivalent Units) are bound for longer transit times and will not be ready in the Asia Pacific for the next loading,” he warned. “Considering a two-week delay in either direction it could mean that four million times of containers will be needed to have availability.”
The Asia to Europe route is the most impacted by delays. The ripple effect of this bleeds into the ability of European exports to move out at a fluid rate.
“Europe has felt the most impact from the situation in the Red Sea given it is the major trade route for goods coming from Asia,” said Stephen Schwarz, executive vice president of Wells Fargo global receivables and trade finance. “However, with more ships being diverted and taking alternative, longer routes to Europe, it is starting to impact global capacity. The delay of containers, reduced capacity, and longer transit times all influence global shipping costs which will start to impact U.S. companies the longer the situation in the Red Sea continues.”
Paolo Montrone, global head of trade for Kuehn + Nagel, said the container crunch situation currently unfolding will have a knock-on effect on European exports.
“We anticipate encountering challenges in European terminals as larger ships are expected to arrive outside of their scheduled times. This influx is likely to cause congestion and slowdowns at terminals and ports, subsequently affecting other services such as shipments from Europe to the USA.”
Companies with higher-value items and time-sensitive products are also shifting to the air. “Drawing from past experiences, we foresee an increase in the need for air freight services in the upcoming weeks,” said Montrone.
Alan Baer, CEO of OL USA, said he is expecting the container crunch to impact Asia as well.
“Recently carriers reduced the amount of free time on import containers to help expedite the return of equipment back to Asia,” said Baer. “However, given the longer transit times vessels are experiencing, the market may face a shortage of empties across Asia until sailings normalize.”
U.S. retailers say they are prepared
The delays of vessels during the pandemic had some retailers like Home Depot, Costco, and Walmart hiring charters to speed up deliveries.
Evelyn Fornes, Home Depot spokeswoman, said it is working with logistics carriers to find alternate routes to limit any impact from the Red Sea conflict.
“As a regular course of business, we always have plans in place for potential disruptions to any of our partners,” Fornes wrote in an email. “We have a large and diverse supply chain with a number of partners, so we’re accustomed to being flexible and agile when there are disruptions. This type of flexibility is what allowed us to adapt and move the unprecedented volumes during the pandemic, despite significant disruptions.”
“Target remains confident in our ability to get guests the products they want and need,” a Target spokesman said via email. “We leverage production and transportation partners across the globe, and the majority of our freight does not travel through the Suez Canal. For any freight that’s being routed around the Suez Canal, we’re working with shipping partners on alternative paths.”
While retailers are expressing confidence, Tesla, Volvo, and Michelin have recently said they have had to halt manufacturing. Ikea has warned of delays of product, as well as British retailer Next and Crocs.
Costco and Walmart did not respond to requests for comment.
East Coast freight rates soar
While freight rates for U.S. West Coast ports have yet to spike, freight rates for the East Coast and Gulf are up. U.S. East Coast rates are between $5,900-$6,700 for a forty-foot container, and rates for the Gulf are between $6,300-$6,900 a 40-foot container, according to Honour Lane.
To avoid delays and fees, some logistics companies are re-routing to the U.S. West Coast, which could result in higher rates eventually.
“U.S. West Coast space is also getting tight as a substantial number of boxes destined for U.S. East Coast /Gulf destinations are being re-routed through U.S. West Coast hubs,” wrote HLS. “Some big beneficial cargo owners like Walmart have proposed to increase their allocation to the U.S. West Coast and reduce allocation to U.S. East Coast.”
The rates for East Coast and Gulf Coast containers are expected to go up even more. In an advisory to clients Tuesday, MSC alerted of both general rate increases and peak season increases starting February 12 for import containers from the Middle East/Indian Sub-Continent to U.S. East Coast, Gulf Coast and San Juan.
Refrigerated containers called “Reefers” and dry containers, both 20-foot and 40-foot, will be charged a $2,200 peak season charge per container plus a $1,000 general rate increase (GRI) per container. This is on top of whatever container fee the shipper pays.
Some carriers are reportedly planning to deploy more capacity to West Coast for the next contract year, HLS says.
“As the rate difference and transit time difference between U.S. East Coast routings and U.S. West Coast routings are both increasing, the conditions are satisfied for carriers to launch premium services to guarantee space and equipment, which is not strange to us.”
The Port of Los Angeles announced on Tuesday, a total of 747,335 containers were processed in December. This marked the fifth consecutive month of year-over-year growth of the port. Even with its 2023 year handling of 8,634,497 Twenty-Foot Equivalent Units, it was around 13% less than in 2022.
After years of teasing that other automakers would license Tesla’s Full Self-Driving (FSD) system, Elon Musk has now admitted that no other automakers want to license it.
“They don’t want it!” He says.
For years, the bull case for Tesla (TSLA) has relied heavily on the idea that the company isn’t just an automaker, but an “AI and robotics company”, with its first robot product being an autonomous car.
CEO Elon Musk pushed the theory further, arguing that Tesla’s lead in autonomy was so great that legacy automakers would eventually have no choice but to license Full Self-Driving (FSD) to survive.
Back in early 2021, during the Q4 2020 earnings call, Musk first claimed that Tesla had “preliminary discussions” with other automakers about licensing the software. He reiterated this “openness” frequently, famously tweeting in June 2023 that Tesla was “happy to license Autopilot/FSD or other Tesla technology” to competitors.
The speculation peaked in April 2024, when Musk explicitly stated that Tesla was “in talks with one major automaker” and that there was a “good chance” a deal would be signed that year.
We now know that deal never happened. And thanks to comments from Ford CEO Jim Farley earlier this year, we have a good idea why. Farley, who was likely the other party in those “major automaker” talks, publicly shut down the idea of using FSD, stating clearly that “Waymo is better”.
Now, Musk appears to have given up on the idea of licensing Tesla FSD. In a post on X late last night, Musk acknowledged that discussions with other automakers have stalled, claiming that they asked for “unworkable requirements” for Tesla.
The CEO wrote:
“I’ve tried to warn them and even offered to license Tesla FSD, but they don’t want it! Crazy …
When legacy auto does occasionally reach out, they tepidly discuss implementing FSD for a tiny program in 5 years with unworkable requirements for Tesla, so pointless.”
Suppose you translate “unworkable requirements” from Musk-speak to automotive industry standard. In that case, it becomes clear what happened: automakers demanded a system that does what it says: drive autonomously, which means something different for Tesla.
Legacy automakers generally follow a “V-model” of validation. They define requirements, test rigorously, and validate safety before release. When Mercedes-Benz released its Drive Pilot system, a true Level 3 system, they accepted full legal liability for the car when the system is engaged.
In contrast, Tesla’s “aggressive deployment” strategy relies on releasing “beta” (now “Supervised”) software to customers and using them to validate the system. This approach has led to a litany of federal investigations and lawsuits.
Just this month, Tesla settled the James Tran vs. Tesla lawsuit just days before trial. The case involved a Model Y on Autopilot crashing into a stationary police vehicle, a known issue with Tesla’s system for years. By settling, Tesla avoided a jury verdict, but the message to the industry was clear: even Tesla knows it risks losing these cases in court.
Meanwhile, major automakers, such as Toyota, have partnered with Waymo to integrate its autonomous driving techonology into its consumer vehicles.
Electrek’s Take
The “unworkable requirements for Tesla” is an instant Musk classic. What were those requirements that were unachievable for Tesla? That it wouldn’t crash into stationary objects on the highway, such as emergency vehicles?
How dare they request something that crazy?
No Ford or GM executive is going to license a software stack that brings that kind of liability into their house. If they license FSD, they want Tesla to indemnify them against crashes. Tesla, knowing the current limitations of its vision-only system, likely refused.
To Musk, asking him to pay for FSD’s mistakes is an “unworkable requirement.” It’s always a driver error, and the fact that he always uses hyperbole to describe the level of safety being higher than that of humans has no impact on user abuse of the poorly named driver assistance systems in his view.
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Environment
CPSC warns Rad Power Bikes owners to stop using select batteries immediately due to fire risk
In an unprecedented move, the US Consumer Product Safety Commission (CPSC) has issued a public safety warning urging owners of certain Rad Power Bikes e-bike batteries to immediately stop using them, citing a risk of fire, explosion, and potentially serious injury or death.
The warning, published today, targets Rad’s lithium-ion battery models RP-1304 and HL-RP-S1304, which were sold with some of the company’s most popular e-bikes, including the RadWagon 4, RadRunner 1 and 2, RadRunner Plus, RadExpand 5, RadRover 5 series, and RadCity 3 and 4 models. Replacement batteries sold separately are also included.
According to the CPSC, the batteries “can unexpectedly ignite and explode,” particularly when exposed to water or debris. The agency says it has documented 31 fires linked to the batteries so far, including 12 incidents of property damage totaling over $734,000. Alarmingly, several fires occurred when the battery wasn’t charging or when the bike wasn’t even in use.
Complicating the situation further, Rad Power Bikes – already facing significant financial turmoil – has “refused to agree to an acceptable recall,” according to the CPSC. The company reportedly told regulators it cannot afford to replace or refund the large number of affected batteries. Rad previously informed employees that it could be forced to shut down permanently in January if it cannot secure new funding, barely two weeks before this safety notice was issued by the CPSC.
For its part, Rad pushed back strongly on the CPSC’s characterization. A Rad Power Bikes Spokesperson explained in a statement to Electrek that the company “stands behind our batteries and our reputation as leaders in the ebike industry, and strongly disagrees with the CPSC’s characterization of certain Rad batteries as defective or unsafe.”
The company explained that its products meet or exceed stringent international safety standards, including UL-2271 and UL-2849, which are standards that the CPSC has proposed as a requirement but not yet implemented. Rad says its batteries have been repeatedly tested by reputable third-party labs, including during the CPSC investigation, and that those tests confirmed full compliance. Rad also claims the CPSC did not independently test the batteries using industry-accepted standards, and stresses that the incident rate cited by the agency represents a tiny fraction of a percent. While acknowledging that any fire report is serious, Rad maintains that lithium-ion batteries across all industries can be hazardous if damaged, improperly used, or exposed to significant water intrusion, and that these universal risks do not indicate a defect specific to Rad’s products.
The company says it entered the process hoping to collaborate with federal regulators to improve safety guidance and rider education, and that it offered multiple compromise solutions – including discounted upgrades to its newer Safe Shield batteries that were a legitimate leap forward in safety in the industry – but the CPSC rejected them. Rad argues that the agency instead demanded a full replacement program that would immediately bankrupt the company, leaving customers without support. It also warns that equating new technology with older products being “unsafe” undermines innovation, noting that the introduction of safer systems, such as anti-lock brakes, doesn’t retroactively deem previous generations faulty. Ultimately, Rad says clear, consistent national standards are needed so manufacturers can operate with confidence while continuing to advance battery safety.
Lithium-ion battery fires have become a growing concern across the US and internationally, with poorly made packs implicated in a rising number of deadly incidents.
While Rad Power Bikes states that no injuries or fatalities have been tied to these specific models, the federal warning marks one of the most serious e-bike battery advisories issued to date – and arrives at a moment when the once-dominant US e-bike brand is already fighting for survival.
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Environment
Rivian’s e-bike brand launches $250 smart helmet with breakthrough safety tech and lights
ALSO, the new micromobility brand spun out of Rivian, just announced official pricing for its long-awaited Alpha Wave helmet. The smart helmet, which introduces a brand-new safety tech called the Release Layer System (RLS), is now listed at $250, with “notify for pre-order” now open on ALSO’s site. Deliveries are expected to begin in spring 2026.
The $250 price point might sound steep, but ALSO is positioning the Alpha Wave as a top-tier lid that undercuts other premium smart helmets with similar tech – some of which push into the $400–500 range. That’s because the Alpha Wave is promising more than just upgraded comfort and design. The company claims the helmet will also deliver a significant leap in rotational impact protection.
The RLS system is made up of four internal panels that are engineered to release on impact, helping dissipate rotational energy – a major factor in many concussions. It’s being marketed as a next-gen alternative to MIPS and similar technologies, and could signal a broader shift in helmet safety standards if adopted widely.
Beyond protection, the Alpha Wave also packs a surprising amount of tech. Four wind-shielded speakers and two noise-canceling microphones are built in for taking calls, playing music, or following navigation prompts. And when paired with ALSO’s own TM-B electric bike, the helmet integrates with the bike’s onboard lighting system for synchronized rear lights and 200-lumen forward visibility.
The helmet is IPX6-rated for water resistance and charges via USB-C, making it easy to keep powered up alongside other modern gear.
Electrek’s Take
This helmet pushes the smart gear envelope. $250 isn’t nothing, but for integrated lighting, audio, and what might be a true leap forward in crash protection, it’s priced to shake things up in the high-end helmet space.
One area I’m not a huge fan of is the paired front and rear lights. Cruiser motorcycles have this same issue, with paired tail lights mounted close together sometimes being mistaken for a conventional four-wheeled vehicle farther away. I worry that the paired “headlights” and “taillights” of this helmet could be mistaken for a car farther down the road instead of the reality of a much closer cyclist. But hey, we’ll have to see.
The tech is pretty cool though, and if the RLS system holds up to its promise, we might be looking at the new bar for premium e-bike head protection.
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