Impact of Red Sea Attacks Raises Shipping Costs and Spurs Early Stockpiling in Britain

NYN | Reports and analyses

The British newspaper The Times has reported that attacks by Sanaa’s forces on ships linked to Israel, the United States, and the United Kingdom have significantly impacted British retailers. These disruptions have prompted early stockpiling of goods in preparation for the Christmas season, leading to increased costs, including shipping expenses, which have more than tripled.

On Monday, The Times reported that “shipping costs have risen by more than threefold and may see further increases in the coming months due to disruptions in maritime routes.” This conclusion comes from an analysis by the supply chain consultancy Inverto, which assessed the impact of Red Sea attacks on global supply chains.

The report noted that Inverto pointed to rising insurance premiums for ships, contributing to higher shipping and supply costs. Companies relying on the Red Sea as a primary trade route face challenges in terms of both cost and time. As a result, businesses may need to adjust their strategies, such as seeking alternative shipping routes or boosting inventories to avoid delays.

The report also stated that the “Red Sea crisis has forced British retailers to stock up early for Christmas, causing the shipping industry to remain busy during the traditionally slow summer period as goods are moved from China and Southeast Asia to the UK and Europe.”

Retailers continue to express concerns that the traditional peak shipping period before Christmas could be disrupted due to the Red Sea turmoil. Additionally, restrictions in the Panama Canal and escalating U.S.-China trade tensions have driven up prices even further.

Patrick Lieberhoff, Director at Inverto, commented, “The prolonged impact of supply chain disruptions in the Red Sea is negatively affecting supply chains, which remain highly fragile.”

He added that “summer is usually a quiet period for shipping and storage, but the industry is now unusually busy as retailers have brought forward their Christmas stockpiling by two months.”

Typically, retailers expect Christmas goods after September, but this year they have started placing orders as early as July, fearing another spike in volatile shipping costs, Inverto noted.

The report further explained that this puts additional pressure on retailers, who may need to seek costly short-term storage solutions.

According to the Drewry Global Container Index, the cost of shipping a standard 40-foot container along major trade routes is currently $4,775, up from $1,389.50 in October last year.

Analysts have warned of further price hikes and predicted that demand for shipping will remain high until February next year. Potential labor disputes on America’s east and gulf coasts may cause additional disruptions to supply chains and further increases in shipping prices.

The report concluded that while there has been a slight slowdown in price surges in recent weeks, from a summer peak of 300%, shipping costs remain 78% higher since the beginning of the year.

British businesses are facing increasing economic challenges due to the UK’s involvement in the U.S.-led coalition aimed at deterring Sanaa’s forces from supporting Gaza. Red Sea attacks on ships linked to Israel, the U.S., and the UK have placed significant pressure on supply chains, resulting in soaring insurance, fuel, and labor costs.

British media outlets, including The Independent, Reuters, and The Guardian, previously reported that disruptions to Red Sea shipping have contributed to a slowdown in Britain’s manufacturing sector, marking its worst decline in 22 months. The disruption has led to reduced exports, sharp increases in shipping prices, and delivery delays. According to a study by the British Chambers of Commerce (BCC), more than half of British manufacturers and retailers have been directly affected by the Red Sea crisis, with container rental costs rising by as much as 300%.

In a prior report by The Independent, it was noted that British companies reliant on the Red Sea as a key trade route have faced increasing challenges since the attacks on commercial ships escalated late last year.

The rise in insurance, fuel, and wage costs has made importing goods via the Red Sea significantly more expensive, negatively impacting British businesses and adding to economic pressures.

In another report, Reuters confirmed that the slowdown in Britain’s manufacturing sector had reached its highest level in 22 months, with weakened exports and shipping delays due to Red Sea maritime attacks playing a major role in declining demand from overseas customers.

The British fashion industry publication Drapers highlighted the severe financial losses the British economy has suffered due to skyrocketing shipping costs. The publication stated that prices have tripled in the last six weeks as a result of Houthi attacks in the Red Sea, with the cost of shipping a 40-foot container from Asia to the UK rising to $7,500 from $2,500.

The Guardian also revealed, based on a February study by the BCC, that over half of British manufacturers and retailers have been affected by the crisis. The study indicated that container rental costs have risen by 300%, with delays adding up to four weeks to delivery times.

These developments come amid Britain’s worsening economic situation, exacerbated by its decision to join the coalition against Yemen. This move was a response to Sanaa’s direct military intervention in support of Palestinian resistance in Gaza.