The ongoing conflict in the Red Sea is causing serious disruption to global shipping and threatening to drive up prices for businesses and consumers. Attacks on commercial vessels by the Houthi group, which has links to Hamas, have led many of the world’s largest shipping companies to divert vessels around the Cape of Good Hope, adding weeks to shipping times and forcing prices higher. Thomas O’Brien, the head of UK-based Boxer Gifts, told the BBC that his shipping costs had risen by 250% in the past two weeks, with shipping companies increasing container rates in response to the disruption.
Mr O’Brien said that shipments were already taking longer than usual as a result of the ongoing Covid-19 pandemic adding that the added delays “are adding another 10 to 14 days to shipments.” Delays have led to concerns that seasonal products will miss important sales periods. In Mr O’Brien’s case, Valentine’s Day and Mother’s Day gaming presents are likely to be impacted. Businesses are also concerned about the impact of rising costs on their core customers, especially if this leads to price rises that may discourage consumers from buying.
The British Retail Consortium has warned that the disruption could result in product shortages and higher prices. Helen Dickinson, the group’s CEO, said that businesses face higher “transportation and shipping insurance costs.” The International Chamber of Shipping has also confirmed that the disruption could be felt in the coming weeks. Nonetheless, some analysts have argued that the situation is manageable and that the costs will not become a permanent feature of shipping in the future.
Rachael Waring, who runs a furniture business, has been hit hard by the Red Sea disruption. She told the BBC that the cost of paying for a container had tripled. The delay also meant that some of her customers were left without furniture: “I’ve got customers that most of the goods on one of the container was destined for, which is a nightmare because they won’t have furniture,” she said. Ms Waring added that the ongoing disruption has had an impact on her cashflow and would also create problems for inflation
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