More than half of UK shipping exporters disrupted by Red Sea crisis

Cost of hiring containers has soared by up to 300 per cent since Yemeni Houthi rebels began attacking commercial vessels in international waterway, UK businesses say

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More than half of UK export businesses have been affected by disruption to shipping in critical trade routes along the Red Sea, a survey has found.

The British Chambers of Commerce, which carried out the survey, warned that pressure on businesses will start to build if the problems persist.

Iran-backed Houthi rebels have been attacking container ships in the Red Sea, one of the world's busiest shipping routes, since November, claiming to target cargo ships with links to Israel in efforts to bring an end to the war in Gaza.

Many vessels have been rerouted through southern Africa over safety concerns, lengthening delivery times and pushing up shipping costs, since the attacks began.

The survey results came as the US and UK-led coalition to protect Red Sea shipping launched a fresh round of strikes against the Houthis on Saturday, the fourth since the Yemen rebels began their attacks.

"We have been clear that we will back our words with actions," British Foreign Secretary David Cameron said on social media, after the assault.

About 53 per cent of manufacturers and business-to-consumer service companies, who include retailers and wholesalers, said they have been affected by turmoil in the Red Sea.

The figure rises to 55 per cent when considering only UK exporters, meaning entities that directly send goods and services overseas, the research by the BCC's Insights Unit showed.

The survey of more than 1,000 businesses, most of which have fewer than 250 staff, revealed that about 37 per cent 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 per cent since the disruption began.

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

Yemenis protest in Sanaa after US and UK hit Houthi sites - in pictures

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".

"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 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.

Agencies contributed to this report.

Updated: February 25, 2024, 10:31 PM