- By Lucy Hooker
- Business Reporter, BBC News
8 hours ago
Image source: Getty Images
A business group said British firms could face higher shipping costs and delays of up to four weeks due to Houthi attacks in the Red Sea.
More than a third of companies surveyed by the British Chambers of Commerce (BCC) said they had been affected.
For exporters who took part in the survey, this number rose to more than half.
The additional costs could contribute to higher prices across the UK economy generally, the BCC warned.
“There was spare capacity in the shipping and freight sector to respond to the difficulties, which bought us some time,” said William Bain, BCC head of trade policy. “But our research suggests that the longer the current situation persists, the more likely it is that cost pressures will increase.”
The BCC found that exporters, retailers, wholesalers and manufacturers were more likely to feel the impact than other businesses, with some running out of goods to sell to customers and components for production lines or facing cash flow difficulties.
Rerouting shipments around Africa's southern tip, the Cape of Good Hope, has added three to four weeks to delivery times, the BCC said, with some companies citing price increases of more than 300% for container rental, it said.
Rachael Waring, managing director of Warings Furniture, which imports interior decoration for pubs and restaurants, said the conflict had already hit her business before Christmas.
Image source: Rachael Waring
image description,
Rachael Waring is already facing delays before Christmas
“We had to budget for additional costs as the quotes we received for containers were significantly higher,” she told the BBC’s Wake Up To Money.
In addition, it offers its customers additional services to compensate for delays. However, it hopes to offset some of the cost increases by negotiating lower prices with the Chinese manufacturers from which it sources its products and to avoid further price increases for customers if it can.
The BCC, which represents more than 50,000 companies in its network, said it would like to see additional government support for exporters given the circumstances, including the formation of an Export Council to promote trade.
“The UK economy saw a fall in its overall goods exports in 2023 and with global demand weak, the government needs to consider whether it can provide support in the March Budget,” Bain said.
The Houthis attacked merchant ships passing through the Red Sea after the Israel-Hamas conflict began in October. The Iran-backed group said it was targeting ships linked to Israel, the United States and the United Kingdom in support of Hamas.
The US and Britain responded with airstrikes on Houthi targets in Yemen.
The Red Sea is the fastest sea route between Asia and Europe. Major shipping companies, including Mediterranean Shipping Company and Maersk, have rerouted ships to the much longer route around the Cape of Good Hope in Africa and then the western side of the continent. But that has driven up costs, including insurance, and led to delays.
Earlier this month, one of Britain's best-known tea brands, Tetley, warned that supplies were “much tighter” than it would have liked, and rival Yorkshire Tea said it was also monitoring the situation closely.
The BCC heard from more than 1,000 companies in its annual survey, which took place between January 15 and February 9.
90% of respondents were small companies with fewer than 250 employees.