More than half of UK exporters are facing problems due to shipping disruptions in the Red Sea caused by attacks on vessels by Yemen’s Houthi rebels.
This is according to a new British Chambers of Commerce (BCC) survey. Disruptions to global trade caused by the Houthis against shipping in the Red Sea are affecting retailers in the UK.
According to the report, 55% of UK exporters have noted problems linked to the crisis. Also, 53% of UK manufacturers, retailers, and wholesalers have reported the same.
Research conducted by the British Chambers of Commerce across more than 1,000 companies in the UK showed crises.
For instance, businesses are facing increased delivery costs. According to the report, the price of shipping a container from Asia to Europe has surged by as much as 300%.
Another major problem is logistical delays, adding up to three to four weeks to usual delivery times. In addition, other issues cited by firms were cashflow problems and component shortages on production lines.
Consequently, global supply chains face severe disruption as the world’s biggest shipping companies divert voyages from the Red Sea.
Origin of the Red Sea Crisis
The Houthis have increased their attacks since the start of the Israel-Hamas war in October 7, 2023. The group, supported by Iran, has been using drones & rockets to strike container ships and tankers transporting goods through the Bab-el-Mandeb strait. The strait is a 20-mile wide channel that splits Djibouti and Eritrea on the African side and Yemen on the Arabian Peninsula.
Ships typically take this passage from the south to reach Egypt’s Suez Canal further north.
However, due to attacks, several of the world’s largest shipping firms are avoiding the route.
Importance of the Red Sea Shipping Route to UK Exporters
Any ship passing through the Suez Canal to or from Asia has to come via the Bab el-Mandeb Strait and the Red Sea. Around 15% of the world’s commercial shipping occurs via the Red Sea, the fastest route from Asia to Europe.
The Suez Canal is the shortest sea route between Europe and Asia. Also, it is crucial in transporting oil and liquefied natural gas (LNG) from the Gulf states to the UK.
According to Vortexa, about 9 million barrels of oil per day went through the Suez Canal in the first half of 2023. However, it is not just about oil. Container ships also carry UK consumer goods like clothes, food, and beverages for exports to Asia.
Unfortunately, due to Houthi attacks, shipping companies have diverted vessels on longer and more expensive journeys around southern Africa’s Cape of Good Hope and then up the west side of the continent.
Delays in products reaching shops in the UK can be expected due to the Cape of Good Hope route adding about 3,500 nautical miles.
The Houthi attacks have caused major disruption to global trade. Trade volume going through the Suez Canal, which connects the Red Sea to the Mediterranean Sea has fallen by 42%. This is according to the United Nations Conference on Trade and Development.
The US and the UK have responded with their own strikes to protect the strategic shipping chokepoint.
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