Top CEOs fear that volatile supply chains are now just the new normal

DAVOS, Switzerland — Top CEOs are closely following tensions in the Red Sea, warning that this kind of volatility for supply chains is likely here to stay.

Houthi rebels from Yemen have attacked commercial vessels traveling in the Red Sea since November. The militant group, which has ties to Iran and sympathetic to the Palestinian cause, claims the attacks are in response to the ongoing war in the Gaza Strip.

The United States and the U.K. have launched a series of strikes aimed at stopping the attacks and protecting the commercial ships. However, tensions are so high that several cargo ships have halted their transit through the region and are instead moving goods via the Cape of Good Hope in Africa. The diversion adds around 10 days, making it longer and costlier to move items from Asia to Europe and vice-versa.

Jesper Brodin, the CEO of Ingka Group, told CNBC this week at the World Economic Forum in Davos, Switzerland: "The last years we have been used to, I think, living in more turbulent times and of course it is regrettable to see that we have another disturbance in the world."

When asked if this volatility was the new normal, he said: "I would say so, in the last years we have accepted the fact that the world is more dynamic and more turbulent."

Ingka Group operates some of the IKEA stores and Brodin said that current;y, unlike during the Covid-19 pandemic, stocks "are full, so we are in good shape."

Supply chains were massively disrupted during the pandemic and the subsequent bounce back, given the restrictions and the closure of borders. Although there has been a rebound in the sector, the recent conflicts, climate change and an overall complex geopolitical picture are leading to higher freight rates and a rethinking