Trouble May Be Brewing

The British Chambers of Commerce (BCC) has today (Monday 26 February) released the results of its annual survey.  The headlines focus on the ongoing impacts of the actions of the Houthis, who have attacked commercial vessels traveling through the Red Sea following the start of the Israel-Hamas conflict in October 2023. The Iran-backed group said it was targeting ships linked to Israel, the US and the UK in support of Hamas.

The BCC survey received over 1,000 replies, of which over 90% were small firms, defined as those with under 250 employees.  37% of respondents said they had been affected by the ongoing action, a figure which increased to over 50% amongst exporters, manufacturers and retailers.  Most respondents cited increased costs and delays as the main impacts.

The Red Sea is the fastest sea route between Asia (where everything is mad these days) and Europe. Large shipping firms, including Mediterranean Shipping Company and Maersk, have diverted vessels to the much longer route around Africa's Cape of Good Hope and then up the west side of the continent.  But that has pushed up costs, including for insurance, as well as creating delays.

"There has been spare capacity in the shipping-freight industry to respond to the difficulties, which has bought us some time," William Bain, BCC head of trade policy, said. "But our research suggests that the longer the current situation persists, the more likely it is that the cost pressures will start to build."

Rerouting shipments around the southern tip of Africa was adding an extra three to four weeks to delivery times, the BCC, which represents more than 50,000 businesses added, with some firms citing price rises of more than 300% for container hire, it said.

"The UK economy saw a drop in its total goods exports for 2023, and with global demand weak, there is a need for the government to look at providing support in the March Budget," Mr Bain continued

In bad news for most of Britain given we drink approximately 100miilion cups of tea a day, Tetley has warned supplies were "much tighter" than it would like and rival Yorkshire Tea said it was also “monitoring the situation closely”.  Some Sainsbury’s stores have also had signs in stores warning of shortages amid national supply disruption.

No wonder Britain has fought so hard throughout history to defend the Suez canal.