Red Sea shipping disruption hits more than half of UK exporters, survey reveals

26 February 2024 , 12:44

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Iran-backed Houthi rebels have been repeatedly attacking container ships in the Red Sea, one of the world's busiest shipping routes (Image: No credit)

A survey by the British Chambers of Commerce (BCC) has found that more than half of UK export businesses have been affected by disruption to shipping in critical trade routes along the Red Sea.

The BCC warned that if these problems continue, pressure on businesses will start to build. Since November, Iran-backed Houthi rebels have been repeatedly attacking container ships in the Red Sea, one of the world's busiest shipping routes.

They claim to be targeting cargo ships with links to Israel in support of Palestinians in the Israel-Hamas conflict. These attacks have forced many vessels to reroute due to safety concerns, which has increased delivery times and shipping costs.

According to the survey, 53% of manufacturers and business-to-consumer service firms, including retailers and wholesalers, said they have been affected by the turmoil in the Red Sea. This figure rises to 55% for UK exporters, meaning firms who send goods and services overseas.

The survey, which included over 1,000 businesses, most of whom have fewer than 250 staff, revealed that about 37% of firms across different sectors have felt an impact. The companies surveyed reported facing increased costs, with some seeing the cost of hiring containers soaring by 300% since the disruption.

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Some businesses have mentioned that delivery times are taking three or four weeks longer due to logistical delays. This is causing problems like cashflow difficulties and a shortage of components on production lines.

William Bain, who is in charge of trade policy at the BCC, said their research gives us "an 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,"

He added that recent data from the Office for National Statistics shows that the impact hasn't yet hit the UK economy, with inflation staying steady in January. He warned: "Our research suggests that the longer the current situation persists, the more likely it is that the cost pressures will start to build."

Mr Bain, whose group represents thousands of businesses, wants the Government to give more support to exporters in the spring Budget. He said: "We are calling for the establishment of an Exports Council to hone the UK's trade strategy and a review of the effectiveness of government funding for export support,"

Lawrence Matheson