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Manufacturers urged to source from Asean amid Red Sea crisis
Published on: Monday, January 15, 2024
By: FMT
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Manufacturers urged to source from Asean amid Red Sea crisis
FMM also urged shippers to book containers and schedules at least one month in advance for exports to affected markets.
PETALING JAYA: The Federation of Malaysian Manufacturers (FMM) has urged manufacturers to depend more on Asean for its business processes amid geopolitical uncertainty and attacks on ships in the Red Sea.

FMM president Soh Thian Lai said “nearshoring” and moving their sourcing to Asean would help firms save costs and circumvent supply chain issues caused by the Israel-Hamas conflict.

Nearshoring refers to a company outsourcing some of its business process or services to a location closer to its base of operations.

In a statement, Soh said Asean’s economic development levels and industry specialisations meant that the respective nations in the region can complement each other, whether it involves human or natural resources.

“As Asean supply chains are also deeply integrated with our northeast Asian neighbours, Malaysian manufacturing companies can build resilience by working closely with our Asean counterparts.

“Not only as a source for inputs and a market for Malaysian manufactured exports but also to integrate deeper for trade and investment regionally,” he said.

The FMM president also urged shippers to book containers and schedules at least one month in advance for exports to affected markets, to prepare for fluctuating freight prices and unknown transit times.

Soh called for shipping companies not to adjust the rates for pre-booked freights, and for any increases or surcharges to be negotiated with shippers.

Last Friday, industry officials said US and UK air strikes on Yemen had raised container shipping rates for key global trade routes, including the Red Sea, one of the world’s busiest routes.

In retaliation for Iran-backed Houthi attacks on Red Sea shipping, US and British warplanes, ships, and submarines launched dozens of strikes across Yemen, widening the regional conflict from Israel’s war on Gaza.

Most containers avoided the nearby Suez Canal, which handles 12% of global trade between Asia and Europe. US and UK forces now advise ships to avoid the conflict zone altogether.

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