BCC business research found 53% of British importers impacted by Red Sea disruption

Characteristics of maritime transportation

Research by the British Chambers of Commerce (BCC) has found that the Red Sea disruption has increased costs and created delays for over half of British importing manufacturers and retailers (53%), with over 55% of exporters also experiencing increased costs and delays.

Issues highlighted in the research include increased costs of up to 300%, transit delays adding up to four weeks for shipments and other knock-on effects – including cashflow difficulties and component shortages on production lines.

The initial turmoil in the wake of the Red Sea crisis has largely gone and rates have fallen from their early highs, with some stability returning. Global schedule reliability has risen to 53.3%, on a Y/Y level however, it remains 7% lower.

With a record-high new container ship order-book and constrained consumer demand in many markets, the container shipping sector has had ample spare capacity to respond to the challenge of diverting vessels around the southern tip of Africa.

Recent ONS data suggests the ‘Red Sea effect’ has yet to filter through to the UK economy, with inflation holding steady. However, the longer the current situation persists, the more likely it is that the cost pressures will start to build, with some sectors of the economy more exposed than others.

The UK economy saw a drop in its total goods exports for 2023, and with global demand weak, the British Chambers of Commerce want the Government to look at providing support in the Spring Budget, including the establishment of an Exports Council to hone the UK’s trade strategy and a review of government funding for export support.

Global challenges
The conflicts in the Middle East and Ukraine are threatening the flow of goods and with climate change disrupting the Panama Canal, the growing tensions are making international supply chains ever more complex.

The World Economic Forum’s Global Risks Report (GRPS) for 2024 highlights how geopolitical tensions in multiple regions is contributing to an unstable global order, eroding trust and security.

GRPS 2024 results highlight a predominantly negative outlook for the global economy over the next two years, that is expected to worsen over the next decade, with supply chain disruption ranked 19th of severe global risks in the short term (2 years) and 25th for the long term (10 years).

If you have any questions or concerns about the impact of the Suez situation on your Asia supply chain, or would like to discuss its wider global implications, please EMAIL Matt Fullard.