The scale of damage to retailers due to Houthi attacks on merchant ships has been named: it will be worse

More than half of UK retailers have suffered disruption due to Houthi attacks on merchant ships in the Red Sea. Costs are rising amid delays, according to research from the British Chambers of Commerce, which shows British exporters have also been hit by geopolitical turmoil.

Research by a leading business lobby group shows more than half of UK retailers and exporters have been hit by trade disruptions in the Red Sea due to attacks on cargo ships by Yemen’s Houthi rebels, The Guardian writes.

The cost of shipping a container from Asia to Europe has risen by as much as 300% for some businesses, while logistics delays have stretched delivery times to three to four weeks, according to a British Chambers of Commerce (BCC) survey.

According to participants in a BCC survey of more than 1,000 companies, most of them small and medium-sized businesses, delays create side effects such as cash flow difficulties and component shortages on production lines.

The Iranian-backed Houthis, who control much of northwestern Yemen, have been attacking commercial ships in the region since November in what they say is a show of support for the Palestinians in the war between Israel and Hamas in Gaza.

The US and UK have responded with their own strikes to protect international shipping along the route, carrying out the latest air strikes on 18 Houthi targets in Yemen this weekend, including weapons storage sites, and there is no sign of the turbulence in the Red Sea letting up.

William Bain, head of trade policy at the lobby group, called on the government to consider supporting exporters in next week’s Budget amid weak global demand and higher costs.

“The shipping industry had spare capacity to respond to the challenges, which gave us some time. And recent data [правительства] also indicate the impact has not yet hit the UK economy, with inflation remaining stable in January, Bain said. “But our research shows that the longer the current situation continues, the more likely it is that cost pressures will begin to build.”

Bain claims it is a “difficult time for firms” as the government’s recent introduction of new customs checks and procedures for imports from Europe following Brexit has also “increased costs and delays”.

“The UK economy has seen a fall in overall merchandise exports in 2023 and with weak global demand the government needs to consider providing support in the March Budget,” he said.

On average, the cost of shipping goods from China to Europe has more than doubled since December as cargo must now be transported around Africa rather than through the Suez Canal, a route that takes about two weeks longer, The Guardian writes.

Supply chain problems are expected to worsen next month as China begins shipments again in earnest following the annual two-week pause for Lunar New Year celebrations, which ended on Saturday with the Lantern Festival.

According to shipping aggregator ParcelHero, there is currently an increase in the use of air freight, with spot rates from China to Europe up 8% in early February and 14% from China to the US.

David Jinks, head of consumer research at ParcelHero, said: “There was an initial rush for airline services as businesses rushed to release products ahead of the celebrations. [лунного нового года]. Currently, the continued demand for air travel on this route is due to many ships being berthed for long periods of time and containers becoming stranded in Chinese ports until production increases enough to restore full service. Airfreight allows companies manufacturing and operating in Asia to overcome the bottleneck in China.”

Earlier this month, credit ratings agency Moody’s warned that if prices remain high, retailers will face a “material impact on profitability by the end of 2024.”

The problems in the Middle East come as supplies through the Panama Canal are also under strain as low rainfall forces it to restrict traffic using its locks.

According to a recent report by the United Nations Conference on Trade and Development (Unctad), more than a fifth (22%) of the world’s shipping containers carrying goods, including natural gas, oil, cars, raw materials and many manufactured goods, passed through the Suez Canal last year. industrial components.

By the first half of this month, 586 container ships had been diverted from the canal, while container ship tonnage on the waterway fell by 82%.