Dive Brief:
- General Dynamics will see fewer Gulfstream G280 aircraft deliveries in 2024 due to the Israel-Hamas war’s impact on its Israel-based supplier, according to a Jan. 24 earnings call.
- The company expects to deliver roughly 160 Gulfstream aircraft this year, compared to 111 delivered in 2023, CEO Phebe Novakovic said. This is about 10 fewer deliveries than initially shared in January 2022.
- General Dynamics remains optimistic about its aerospace delivery outlook, with Novakovic noting that they plan to deliver more aircraft in 2025, and even more in 2026.
Dive Insight:
General Dynamics’ lower outlook is the latest example of how the Israel-Hamas war continues to affect and disrupt supply chains, leading companies to reevaluate their operational strategies and expectations.
This includes automotive supply chains. According to reporting from The Wall Street Journal, Tesla plans to halt nearly all production at its Berlin factory from Jan. 29 to Feb. 11 due to a lack of components. Volvo Cars also planned to halt production at a plant in Belgium due to “adjusted sea routes that have resulted in a delivery delay of gearboxes,” according to that same article.
In December, Houthi-led attacks on vessels traveling through the Red Sea made the Suez Canal a less viable route to transport cargo, which prompted shippers to reroute ships or halt transit, completely shifting their shipping strategies. A month later, shippers are still facing challenges as ocean shipping rates continue to climb due to alternative routes, safety concerns and longer transit times.
In a Jan. 24 email update, Freightos noted that the ocean delays due to the Red Sea crisis is “reportedly starting to shift some ex-Asia ocean volumes to rail and air cargo alternatives.” Meanwhile, forwarders like C.H. Robinson and Kuehne+Nagel are opting for a combination of sea and air solutions to help mitigate the potential impact.
Slowed ocean shipping has also impacted retailers like Wayfair and Best Buy that opt for global sourcing strategies over domestic sourcing. Ikea, for instance, is currently considering other supply routing options.
Correction: The first sentence of this story was updated to clarify the war's impact was on an Israel-based supplier.
