International Supply Chain Re-routing Phenomena

In 2025, global supply chains have undergone unprecedented re-routing, driven by geopolitical fractures caused by US Tariffs, climate volatility, and technological shifts. Finance teams across the world, facing immediate cost shocks, have redirected container flows to reduce shipment days and curb duty exposure. Houthi attacks in the Red Sea have forced 85 % of Asia–Europe ship traffic around the Cape of Good Hope (as opposed to the Suez Canal), inflating freight rates from estimated USD 1,800 to estimated USD 6,200 per FEU (Forty Foot Equivalent Unit) – the most recent Houthi attack was as early as this month, evidencing the serious threat it holds to the Suez Canal and the ships using it.

The Panama Canal between North and South America, shortens journeys by 22 days connecting the Pacific Ocean with the Atlantic Ocean - but now due to persistent drought only 32 ships a day can pass as opposed to 36-38 ships prior to the drought. This has pushed bulk and LNG “Liquefied Natural Gas’’ carriers to the Suez Canal running through Egypt, connecting the Red Sea with the Mediterranean Sea, but with the real risk of Houthi attacks.

As a result, working-capital cycles lengthened - resulting in increased demand for supply-chain finance (SCF). Banks are trading more blockchain-tracked receivables, which form a single, transparent, tamper-proof source of truth regarding the status of invoices, reducing fraud and disputes. Inventory carrying costs have surged significantly and “just-in-time” models are reborn as “just-in-case” models, a significant shift in supply chain strategy due to potential global disruptions, whereby the traditional focus on efficiency and minimal inventory is being balanced with a need for resilience and safety stock. Samsung for example currently holds 18 days of safety stock in Rotterdam micro-hubs, funded by dual-currency revolving credit facilities.

Risk transfer instruments have also evolved. Parametric (derived from the word parameter) insurance protects shippers against canal delays—say the water threshold or parameter drops below a certain level, it is followed by a quick cash pay-out solving for the delay. Currency hedging desks worldwide reported a significant uptick in currency cross-forwards as treasurers hedge/ lock in re-routed flows. Currency Cross forwards allow for an exchange between two non-US currencies without converting them to USD – it saves time and money.

Re-routing has become part of a company’s competitive advantage in a geo-political and geo-economical fragmented world. Companies that master rerouting, digital SCF and AI re-routing optimisation technology, will protect their margins and survive longer.