Logitech reckons the conflict in the Red Sea where Houthi rebels are attacking container ships will add some delays to logistics and potentially some cost too.

The keyboard and mouse maker is just getting its channel stock closer to normal levels following the roller coaster ride during the early years of the COVID-19 pandemic: it didn't have enough stock to meet the huge demand when the world locked down in 2020-2022 and then had too much last year as demand waned.

As Reg readers know, Iran-backed Houthi rebels in Yemen started attacking shipping vessels they claimed were Israeli-owned, in response to the shelling in Gaza by Israeli armed forces, which was itself in response to 1,200 Israeli civilians being taken hostage by Hamas. The rebels also attacked containers owned by companies in the West, provoking retaliation from the UK and US.

Ships are now re-routing via the Cape of Good Hope - adding many days to the final destination. Just 51 ships made this journey in 2023 but that figure has already tripled in January alone.

Talking to financial analysts on its latest earnings conference call, Chuck Boynton, Logitech's chief financial officer, said it is trying keep more inventory on hand via distributors in what seems like sensible contingency planning.

He reckons the Red Sea troubles "add about four weeks of lead time, so it's not that material. There will be an impact to air… and a little higher cost. So I could expect a little inventory increase, maybe we can keep it flat.”

Logitech CEO Hanneke Faber said it is currently taking about 30 days longer to ship kit from Asia to Europe "so that will have an effect in the quarters ahead." The former president of Unilever's Nutrition Business Group, who joined Logitech last year, estimated the logistic change will hit profit margin by about 100 basis points or about one percent.

"You have to pay for 30 days more for stuff to be on the ship and there's a little bit of inventory impact, so it's more costly," she told Reuters. She said the re-route should mostly impact Europe.

Steve Brazier, CEO at channel analyst Canalys, said that "most shipping" from Asia to Europe was no longer via the Red Sea and is instead "taking the much longer route" via the Cape at the southernmost tip of Africa.

"This is leading to delays of several weeks to shipments, and increased cost of delivery," he told The Reg. "However, since most products are in a good supply position currently, the impact may not be so visible to customers." ®

https://www.theregister.com//2024/01/24/logitech_warns_of_logistical_impact/