Red Ocean assaults postponing merchandise and pushing up costs, firms say

 Red Ocean assaults postponing merchandise and pushing up costs, firms say

British firms say they are confronting higher transportation expenses and deferrals of as long as about a month because of Houthi assaults in the Red Ocean, a business bunch said.

As per a recent survey conducted by the British Chambers of Commerce (BCC), over three-quarters of respondents reported feeling the impact.

Interestingly, more than half of those surveyed responded, indicating a significant level of concern.

The BCC issued a cautionary note, highlighting that additional expenses could contribute to inflationary pressures throughout the UK economy.

William Bain, who heads the BCC's trade policy, emphasized that while the shipping industry has some flexibility to tackle challenges, prolonged disruptions may eventually lead to rising costs.

The survey revealed that importers, retailers, wholesalers, and manufacturers were among the hardest hit, resulting in potential shortages for consumers, reduced supplies for production lines, and cash flow challenges.

Moreover, the BCC noted that circumventing the Cape of Good Hope in Africa was causing delays of three to four weeks in delivery times, with reports of container rental prices soaring by over 300%.

Rachel Warren, managing director of Warnings Furniture, a supplier of interior fittings for pubs and restaurants, shared concerns about the business's early struggles due to disruptions ahead of the holiday season.

In an interview with BBC's Wake Up to Money, they explained, "We've had to adjust our budget to cover extra expenses due to the soaring prices of containers."

Additionally, they're going the extra mile to provide additional services to customers affected by delays. Nevertheless, they're optimistic about negotiating better deals with Chinese manufacturers to counteract the rising costs. Their ultimate aim is to prevent any additional price hikes for consumers, if at all possible.

The British Chambers of Commerce (BCC), which speaks for a vast network of over 50,000 businesses, is stressing the importance of additional government support for importers. They're proposing the establishment of a revenue council to bolster trade.

Mr. Bain featured, "With the UK economy encountering a drop in generally imports for 2023 and worldwide interest disappearing, it's fundamental for the public authority to investigate roads for help in the upcoming March budget."

Following the onset of conflict between Israel and Hamas last October, the Houthis have targeted commercial ships traversing the Red Sea. An Iran-backed faction claims responsibility, alleging its actions support Hamas against Israel, the US, and Britain.

Both the US and Britain have retaliated with airstrikes against Houthi positions in Yemen.

The Red Sea serves as the quickest maritime link between Asia and Europe. Major shipping firms, like Maersk, have diverted ships around the Cape of Good Hope, leading to escalated expenses, including insurance, and delays as they head westward toward the Indian Ocean.

Earlier this month, Tetley, a prominent British tea brand, cautioned about the increasingly challenging supply situation. Meanwhile, Yorkshire Tea, a rival, also expressed apprehension, closely monitoring developments.

BCC's annual survey, conducted between January 15th and February 9th, garnered feedback from over 1,000 companies. Of these respondents, 90% represented small firms with fewer than 250 employees.