Businesses say Red Sea attacks are delaying goods and raising costs

Business groups say British businesses are facing higher transport costs and delays of up to four weeks due to Houthi attacks in the Red Sea.

More than a third of businesses surveyed by the British Chambers of Commerce (BCC) said they had been affected.

This figure was more than half of the exporters who responded to the survey.

The additional costs could contribute to higher prices across the UK economy, the BCC warned.

“The shipping and cargo industry has the capacity to respond to challenges and this has bought us time,” said William Bain, head of BCC trade policy. “However, our research shows that the longer the current situation persists, the more cost pressures are likely to start to increase.”

BCC research shows that exporters, retailers, wholesalers and manufacturers are more likely to feel the impact than other businesses, with some businesses seeing a loss of goods they sell to customers or parts of their production lines. running out of money or facing cash flow difficulties.

BCC says rerouting of shipping around the Cape of Good Hope at the southern tip of Africa is adding an additional three to four weeks to delivery times, with some companies saying container rental prices have increased by more than 300%. .

Rachel Waring, managing director of Warings Furniture, which imports upholstery for pubs and restaurants, said the dispute had been affecting her business since before Christmas.

“The quote for the container was quite high so we had to budget for extra costs,” she told BBC’s Wake Up To Money.

She is also offering additional services to customers to make up for delays. But she hopes to offset some of the cost increases by negotiating lower prices with the Chinese manufacturers she sources from and, if possible, avoid further price increases for her customers.

BCC, which represents more than 50,000 companies across its network, said it would like to see additional government support for exporters given the situation, including the establishment of an export council to promote trade.

Mr Bain said: “The UK economy will need to consider support in the March Budget, as total merchandise exports will fall in 2023 and global demand is weak.”

Following the start of the conflict between Israel and Hamas in October, the Houthis attacked commercial ships sailing through the Red Sea. The Iranian-backed group said it was targeting ships linked to Israel, the United States and the United Kingdom, which support Hamas.

The US and UK responded with airstrikes on Houthi targets in Yemen.

The Red Sea is the fastest sea route between Asia and Europe. Major shipping companies such as Mediterranean Shipping Co. and Maersk have repurposed ships for much longer routes around Africa’s Cape of Good Hope and up the western side of the continent. But it has increased costs, including insurance premiums, and caused delays.

Tetley, one of Britain’s best-known tea brands, warned earlier this month that supplies were “much tighter” than it had hoped, and rival Yorkshire Tea said it was also monitoring the situation closely.

BCC heard from more than 1,000 companies in its annual survey, which ran from January 15 to February 9.

90% of responding companies were small businesses with fewer than 250 employees.