Disclaimer: The information provided on the Timber Exchange Market Data Hub is sourced from a variety of publicly available data sources and confidential sources that have not been independently verified. Timber Exchange is not responsible for any expenses, damages, losses, or costs incurred as a result of using or relying on the information provided on this site. By using the Timber Exchange Market Data Hub, you agree to use the information at your own risk and acknowledge that any decisions made based on the information provided are done so solely at your own risk.
European & African firms face setback in cash flow recovery amid Red Sea crisis

European & African firms face setback in cash flow recovery amid Red Sea crisis

Posted on January 29, 2024

The Red Sea crisis is diverting ship routes from the Suez Canal which poses a risk to the cash flow recovery of European industrial firms.

Extended crisis conditions may raise working capital needs for these companies due to slow transfers of fully manufactured components and products, along with higher shipping costs.

European manufacturers, having reduced stocks in 2023 after supply chain disruptions, expect average free cash flow margins of 1.5% in 2023 and 2024, gradually increasing with order deliveries and facing inflation-driven cost hikes.

In contrast, free cash flow margins for manufacturers in the Middle East and Africa may lag behind other regions due to altered shipping routes and restricted major port options.

Changing ship courses will limit major port choices, increasing the need for recharge services to transport container-stored goods to final destinations.