UK

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

The British Chambers of Commerce warned that pressure on businesses will start to build if the problems persist.

HMS Diamond has been deployed to the Red Sea
Red Sea shipping attacks HMS Diamond has been deployed to the Red Sea (LPhot Chris Sellars/MoD/Crown Copyright/PA)

More than half of UK export businesses have been affected by disruption to shipping in critical trade routes along the Red Sea, according to a survey by an influential business group.

The British Chambers of Commerce (BCC) warned that pressure on businesses will start to build if the problems persist.

Since November, Iran-backed Houthi rebels have been repeatedly attacking container ships in the Red Sea, one of the world’s busiest shipping routes.

The group claims it has been targeting cargo ships with links to Israel in efforts to support Palestinians in the Israel-Hamas conflict.

The attacks have forced many vessels to reroute over safety concerns, lengthening delivery times and pushing up shipping costs.

Some 53% of manufacturers and business-to-consumer service firms, which includes retailers and wholesalers, said they have been affected by turmoil in the Red Sea.

The figure rises to 55% of UK exporters, meaning firms who send goods and services overseas, according to the research by the BCC’s Insights Unit.

The survey of more than 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.

Others mentioned logistical delays adding up to three or four weeks to delivery times.

The businesses said this was creating knock-on effects such as cashflow difficulties and a shortage of components on production lines.

William Bain, the head of trade policy at the BCC, said the research provides “an immediate insight into the impact of Red Sea disruption on UK businesses”.

CITY BP (PA Graphics/Press Association Images)

“There has been spare capacity in the shipping freight industry to respond to the difficulties, which has bought us some time,” he said.

“And recent ONS (Office for National Statistics) data also indicates the impact has yet to filter through to the UK economy, with inflation holding steady in January.

“But 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 said the group, which represents thousands of businesses, wants the Government to use the spring Budget to allocate greater support for exporters.

“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,” he said.