More than half of UK exporters hit by Red Sea shipping disruption
Price hikes up to 300% for container hire will impact inflation
More than half (55%) of UK exporters have been impacted by disruption to shipping in the Red Sea and face price hikes up to 300%, according to analysis from the British Chambers of Commerce (BCC).
In a survey of almost 1,100 UK businesses in January and February, the BCC finds 53% of manufacturers and retailers have also been affected by delays and extra costs from rerouting goods from the usual Red Sea and Suez Canal route around Africa’s Cape of Good Hope.
The survey finds some firms reporting price hikes of up 300% for container hire costs since the threat of Houthi attacks in the Red Sea, as well as three or four weeks’ delays to delivery times. Firms also reveal the impact of cashflow and component shortages in production lines, the BCC said.
William Bain, head of trade policy at the BCC, said: “This research gives us immediate insight into the impact of Red Sea disruption on UK businesses.”
“There has been spare capacity in the shipping freight industry to respond to the difficulties, which has bought us some time… but our research suggests that the longer the current situation persists, the more likely it is that the cost pressures will start to build,” he added.
Bain said that the impact of shipping disruption has yet to filter through to the UK economy, with inflation holding steady in January. But he warned that the economy recorded a drop in total goods exports in 2023 amid weak global demand, while new customs checks for imports are adding to costs and delays.
The BCC issued a call for a new Exports Council to oversee the UK’s trade strategy and review government funding for export support.
“Overseas trade is vital to growing our economy. We must do everything we can to see businesses through these tough times, and then set a laser-sharp focus on expanding exports for the future,” Bain said.
