GRI highlights impact of geopolitical crises on tire-supply costs

Colombo – Current conflicts in the Middle East and Red Sea regions are pushing up shipping costs for Asian tire makers, said Prabhash Subasinghe, founder and MD of GRI.

The geopolitical crises have had a “huge impact” in terms of vessel availability and transport costs, particularly for exports to Europe, the leader of the Sri Lankan off-road tire maker explained. 

Cost rises have been “pretty dramatic”, according to Subasinghe, noting that shipping costs had doubled since the Middle East conflict broke out last October.

"The entire industry is generally adopting a surcharge of almost €1200 to €2000,” GRI's managing director further reported in an 8 Feb interview with ERJ.

As a result, tire manufacturers will have to adjust their final prices depending on the product-type, said Subasinghe.

“For pneumatic tires, you're talking of probably an increase of at least 5% and for industrial tires the increase is between 2% and 3%,” he explained.

However, Subasinghe believes that if the Red Sea crisis does not reach resolution, the situation is certainly going to impact tire prices even further.

“We encountered this same problem in 2021, all the way up to 2022, when all the containers that were shipped from Asia, got held-up in Europe and the US and couldn't return on time,” he noted.

“The global economy is ill-prepared to withstand another wave of inflation triggered by rising costs in the shipping industry,” Subasinghe warned.