Delays to global trade caused by hundreds of ships diverting around Africa to avoid attacks in the Red Sea are set to inflict months of disruption and imminent price rises on supplies of household items and foodstuffs, trade experts have warned.
Figures show that an armada of some 350 ships – more than half of the total that would normally travel through the Red Sea and the Suez Canal – are now re-routing around the Cape of Good Hope, adding up to 10 days and £1.6m in extra costs to scheduled voyages between Asia and Europe.
The dramatic shift in global shipping patterns caused by attacks in the Red Sea by Iran-backed Houthi rebels in Yemen means weeks of disruption and allied price rises are now likely to be already locked into supply chains as producers seek to maintain the flow of goods against escalating costs.
Fruit, meats, seafood, grains, wine, tea, coffee, and clothing and key ingredients such as palm oil are among the items set to be affected as a result of the disrupted traffic.
Maersk, the world’s second-largest container shipping company by capacity, on Tuesday night announced it was extending a 48-hour halt to vessels passing through the Red Sea after one of its ships was attacked on Sunday.
The Danish-owned carrier said it was assessing a “constantly evolving situation” on the trade route and gave no indication when vessels might resume journeys through the Suez Canal.
High-street retailers and manufacturers ranging from Lidl to Ikea to Chinese electric car manufacturer Geely have already said they are diverting vessels carrying supplies around Africa, with both Ikea and Geely warning of delays and potential availability constraints as a result.
Prices of key food commodities such as grains and rice have risen by 5 per cent in recent days and crude oil prices on Tuesday rose by 2 per cent after Iran rejected calls from London and Washington to end all support for attacks on commercial shipping in the Red Sea by Houthi forces and sent a warship to the area amid growing fears of a regional escalation linked to the Israel-Hamas war.
Representatives of major UK-based importers said the result of the disruption was “imminent” price rises for many products as the effects of the shipping delays caused when Houthi attacks stepped up in November begins to feed through the global supply chain.
The Suez Canal between the eastern Mediterranean and the Red Sea is a key conduit for household and consumer goods, with around a third of global container traffic passing through the trade route.
Marco Forgione, director general of the Institute of Export and International Trade, said: “The impact of the rerouting of shipping will be felt by consumers in the coming weeks, with the prices of many products rising imminently.
“We face an uncertain and potentially difficult period, with items including fruit, meats, seafood, grains, wine, tea, coffee, and clothing and key ingredients such as palm oil and energy costs all impacted by delays and knock-on disruption to supply chains, which could take months to resolve … It is inevitable that we will see the price of products on our shelves being impacted.”
Retailers said they would work hard to absorb additional costs but acknowledged that factors such as a doubling in shipping insurance costs and longer transit times could lead to price rises and lower availability of some goods.
Helen Dickison, chief executive of the British Retail Consortium, said: “The latest challenges through the Red Sea could mean some delays on the supply of products coming from the Far East.
“Over the coming months, some goods will take longer to be shipped, as they are re-directed via longer routes and there could be a knock-on impact on availability and prices as a result of higher transportation and shipping insurance costs. Retailers will work hard to ensure their customers are not affected.”
Western countries have sought to minimise the impact on the trade system of the Houthi attacks on shipping – using a mixture of drones, missiles and fast boats – with an increased naval presence in the Red Sea and political pressure. In December Washington announced Operation Prosperity Guardian, an international naval coalition including Britain, France and other nations, designed to protect commercial vessels passing through the Bab el-Mandeb Strait, a key choke-point off the Yemen coast between the Horn of Africa and the Middle East.
But many shipping companies have chosen instead to send their vessels on a 3,500 nautical mile diversion around Africa, adding an additional $2m (£1.6m) in extra fuel and labour costs to each journey by a large container ship between Asia and Europe amid uncertainty about the viability of the Red Sea route.
Maersk had on Monday paused two of its vessels in the Red Sea after passing through the Suez Canal while it considered its options following an attempted piracy attack on one of its vessels by Houthi forces over the weekend.
The company had in recent days indicated it was resuming operations through the Red Sea after a previous pause but on Tuesday hinted at an open-ended halt to journeys. In a statement, the company said: “We will continue to pause all cargo movement through the Red Sea while we further assess the constantly evolving situation.”
Flexport, a shipping logistics company, said that as of late last week some 350 vessels out of 620 that would normally be plying routes via the Red Sea had already diverted around the Cape of Good Hope, or were expected to do so – representing 56 per cent of normal total.
At the same time, 14 vessels which had been headed around Africa had turned around or continued heading for the Bab el-Mandeb Strait. In a note to shipping operators, the company said: “This highlights the fluid situation and varying approaches from carriers as other vessels for now appear to continue their route south of the Cape of Good Hope.”
Several major shipping companies have already announced surcharges to reflect the increased costs associated with the extra 10-day journey around the Cape of Good Hope. Danish-owned Maersk is requiring an extra $700 (£555) for each 20ft container travelling between China and northern Europe, while CMA CGM, a French-owned shipping giant, is seeking $325 (£257) per container.
If people wonder why, even if you don’t import any food from Asia the current situation causes a shortage of vessels and containers many are forced to take a longer route which reduces their regional availability.
[removed]
“taking back control” is doing wonders for the cost of living.
Is there a considerable amount of raw produce transported to the UK via the Red Sea? Presumably it’ll be a wide variety of stuff, rice, tea, spices, seafood etc?
I’m probably going to cop some flak but considering the amount of combined money spent on the US (predominantly), French, UK etc militaries combined. If they can’t trivially keep a shipping lane open from predominantly unsophisticated drones it’s pretty pathetic. This has been an obvious potential threat for years. I appreciate it takes time to get assets etc into the region initially but come on.
Bag of rice falls over in China, prices rise. Rains in London, prices rise… Any excuse will do for greedy corporates to raise prices.
It’s annoying that there isn’t a trading block with good road and rail networks next door that we could trade with instead. One which stretches deep towards the Mediterranean, so we could have fresh produce most of the year. One connected via a tunnel or ferries that only take an hour or two. But that’s just wishful thinking.
Supermarket bosses happy. They were just getting worried they may actually have to lower prices with inflation on the decline.
This is utter nonesense. Whatch the supermarkets stock prices to see where that money goes. Like the energy crisis while energy companies and producers made bank.
I thought all food products come from the 100km strip in Ukraine that is occupied by Russians??? Last 2 years all food prices kept climbing because of that…
Convenient? It seems that every time we are about to experience the true economic consequences of Brexit something else conveniently appears on the horizon that can be blamed instead. I know it’s just coincidence but come on already!
Yup, here we go again. 2days into the new year. We’re still getting fucked.
Nice.
Most of our food imports come from countries that you do not need to cross the Suez or even Panama Canal to access.
Our vegetables come mostly from Spain,Meat from Poland and Ireland and in grain Ukraine,Ourselves and Canada.
Tea,Rice and other goods from Africa/India are more at risk.
Your food prices are rising because of Iran. If only the US and UK would go to war with them before the upcoming elections.
I mean, they have already price gouged so technically they don’t have to rise it anymore.
However, we know they are greedy fucks.
Once again reminding us of the importance of maximising self sufficiency to its fullest extent, Britain needs to be prepared for further instability becoming increasingly common so meeting as much of the food demand from domestic (or more local sources where needed, i.e. EU).
So what a tin of beans will now cost £5 and butter £10, cheese £20. Its interesting to see how far people will get squeezed before society snaps and some real civil disruption takes place. Phsycial taking back from the haves!
18 comments
Article contents:
Delays to global trade caused by hundreds of ships diverting around Africa to avoid attacks in the Red Sea are set to inflict months of disruption and imminent price rises on supplies of household items and foodstuffs, trade experts have warned.
Figures show that an armada of some 350 ships – more than half of the total that would normally travel through the Red Sea and the Suez Canal – are now re-routing around the Cape of Good Hope, adding up to 10 days and £1.6m in extra costs to scheduled voyages between Asia and Europe.
The dramatic shift in global shipping patterns caused by attacks in the Red Sea by Iran-backed Houthi rebels in Yemen means weeks of disruption and allied price rises are now likely to be already locked into supply chains as producers seek to maintain the flow of goods against escalating costs.
Fruit, meats, seafood, grains, wine, tea, coffee, and clothing and key ingredients such as palm oil are among the items set to be affected as a result of the disrupted traffic.
Maersk, the world’s second-largest container shipping company by capacity, on Tuesday night announced it was extending a 48-hour halt to vessels passing through the Red Sea after one of its ships was attacked on Sunday.
The Danish-owned carrier said it was assessing a “constantly evolving situation” on the trade route and gave no indication when vessels might resume journeys through the Suez Canal.
High-street retailers and manufacturers ranging from Lidl to Ikea to Chinese electric car manufacturer Geely have already said they are diverting vessels carrying supplies around Africa, with both Ikea and Geely warning of delays and potential availability constraints as a result.
Prices of key food commodities such as grains and rice have risen by 5 per cent in recent days and crude oil prices on Tuesday rose by 2 per cent after Iran rejected calls from London and Washington to end all support for attacks on commercial shipping in the Red Sea by Houthi forces and sent a warship to the area amid growing fears of a regional escalation linked to the Israel-Hamas war.
Representatives of major UK-based importers said the result of the disruption was “imminent” price rises for many products as the effects of the shipping delays caused when Houthi attacks stepped up in November begins to feed through the global supply chain.
The Suez Canal between the eastern Mediterranean and the Red Sea is a key conduit for household and consumer goods, with around a third of global container traffic passing through the trade route.
Marco Forgione, director general of the Institute of Export and International Trade, said: “The impact of the rerouting of shipping will be felt by consumers in the coming weeks, with the prices of many products rising imminently.
“We face an uncertain and potentially difficult period, with items including fruit, meats, seafood, grains, wine, tea, coffee, and clothing and key ingredients such as palm oil and energy costs all impacted by delays and knock-on disruption to supply chains, which could take months to resolve … It is inevitable that we will see the price of products on our shelves being impacted.”
Retailers said they would work hard to absorb additional costs but acknowledged that factors such as a doubling in shipping insurance costs and longer transit times could lead to price rises and lower availability of some goods.
Helen Dickison, chief executive of the British Retail Consortium, said: “The latest challenges through the Red Sea could mean some delays on the supply of products coming from the Far East.
“Over the coming months, some goods will take longer to be shipped, as they are re-directed via longer routes and there could be a knock-on impact on availability and prices as a result of higher transportation and shipping insurance costs. Retailers will work hard to ensure their customers are not affected.”
Western countries have sought to minimise the impact on the trade system of the Houthi attacks on shipping – using a mixture of drones, missiles and fast boats – with an increased naval presence in the Red Sea and political pressure. In December Washington announced Operation Prosperity Guardian, an international naval coalition including Britain, France and other nations, designed to protect commercial vessels passing through the Bab el-Mandeb Strait, a key choke-point off the Yemen coast between the Horn of Africa and the Middle East.
But many shipping companies have chosen instead to send their vessels on a 3,500 nautical mile diversion around Africa, adding an additional $2m (£1.6m) in extra fuel and labour costs to each journey by a large container ship between Asia and Europe amid uncertainty about the viability of the Red Sea route.
Maersk had on Monday paused two of its vessels in the Red Sea after passing through the Suez Canal while it considered its options following an attempted piracy attack on one of its vessels by Houthi forces over the weekend.
The company had in recent days indicated it was resuming operations through the Red Sea after a previous pause but on Tuesday hinted at an open-ended halt to journeys. In a statement, the company said: “We will continue to pause all cargo movement through the Red Sea while we further assess the constantly evolving situation.”
Flexport, a shipping logistics company, said that as of late last week some 350 vessels out of 620 that would normally be plying routes via the Red Sea had already diverted around the Cape of Good Hope, or were expected to do so – representing 56 per cent of normal total.
At the same time, 14 vessels which had been headed around Africa had turned around or continued heading for the Bab el-Mandeb Strait. In a note to shipping operators, the company said: “This highlights the fluid situation and varying approaches from carriers as other vessels for now appear to continue their route south of the Cape of Good Hope.”
Several major shipping companies have already announced surcharges to reflect the increased costs associated with the extra 10-day journey around the Cape of Good Hope. Danish-owned Maersk is requiring an extra $700 (£555) for each 20ft container travelling between China and northern Europe, while CMA CGM, a French-owned shipping giant, is seeking $325 (£257) per container.
If people wonder why, even if you don’t import any food from Asia the current situation causes a shortage of vessels and containers many are forced to take a longer route which reduces their regional availability.
[removed]
“taking back control” is doing wonders for the cost of living.
Is there a considerable amount of raw produce transported to the UK via the Red Sea? Presumably it’ll be a wide variety of stuff, rice, tea, spices, seafood etc?
I’m probably going to cop some flak but considering the amount of combined money spent on the US (predominantly), French, UK etc militaries combined. If they can’t trivially keep a shipping lane open from predominantly unsophisticated drones it’s pretty pathetic. This has been an obvious potential threat for years. I appreciate it takes time to get assets etc into the region initially but come on.
Bag of rice falls over in China, prices rise. Rains in London, prices rise… Any excuse will do for greedy corporates to raise prices.
It’s annoying that there isn’t a trading block with good road and rail networks next door that we could trade with instead. One which stretches deep towards the Mediterranean, so we could have fresh produce most of the year. One connected via a tunnel or ferries that only take an hour or two. But that’s just wishful thinking.
Supermarket bosses happy. They were just getting worried they may actually have to lower prices with inflation on the decline.
This is utter nonesense. Whatch the supermarkets stock prices to see where that money goes. Like the energy crisis while energy companies and producers made bank.
I thought all food products come from the 100km strip in Ukraine that is occupied by Russians??? Last 2 years all food prices kept climbing because of that…
Convenient? It seems that every time we are about to experience the true economic consequences of Brexit something else conveniently appears on the horizon that can be blamed instead. I know it’s just coincidence but come on already!
Yup, here we go again. 2days into the new year. We’re still getting fucked.
Nice.
Most of our food imports come from countries that you do not need to cross the Suez or even Panama Canal to access.
Our vegetables come mostly from Spain,Meat from Poland and Ireland and in grain Ukraine,Ourselves and Canada.
Tea,Rice and other goods from Africa/India are more at risk.
Your food prices are rising because of Iran. If only the US and UK would go to war with them before the upcoming elections.
I mean, they have already price gouged so technically they don’t have to rise it anymore.
However, we know they are greedy fucks.
Once again reminding us of the importance of maximising self sufficiency to its fullest extent, Britain needs to be prepared for further instability becoming increasingly common so meeting as much of the food demand from domestic (or more local sources where needed, i.e. EU).
So what a tin of beans will now cost £5 and butter £10, cheese £20. Its interesting to see how far people will get squeezed before society snaps and some real civil disruption takes place. Phsycial taking back from the haves!