Bloomberg reported that on the 2nd, Nintendo shares fell by nearly 5% on concerns that logistics expense for the new console Switch 2 would increase due to the fallout from U.S. airstrikes on Iran.
According to the report, as instability in the Middle East spread following U.S. and Israeli airstrikes on Iran, major container shipping companies are bypassing the Suez Canal and rerouting around the Cape of Good Hope in Africa. Due to the route change, shipments of Switch 2 bound for Europe are expected to be delayed by more than 10 days.
Bloomberg explained that Nintendo relies heavily on sea transport to ship its $450 console from major Asian production bases such as China, Vietnam, and Malaysia. With freight rate increases and other factors stemming from the Iran situation, logistics expense are rising, and console makers such as Nintendo and Sony Group are expected to be hit. On the day, shares of Sony Group, which makes the PlayStation 5 (PS5) console, also fell as much as 3%.
Bloomberg said, "Nintendo is already taking losses from the tariff on Switch 2 products exported to the United States and from a Japan-only low-priced model sold below cost," adding, "The Middle East console market is growing rapidly, but if logistics disruptions persist for a long time, growth in the region could also slow."