As a result of Houthi attacks in the Red Sea, British companies have reported that they are experiencing increased shipping costs as well as delays of up to four weeks, according to a business association.
A survey conducted by the British Chambers of Commerce (BCC) found that more than a third of the companies surveyed reported that they had been impacted.From the perspective of exporters who participated in the poll, this number increased to more than half.
In general, the BCC warned that the additional costs could contribute to higher prices in the economy of the United Kingdom.
"There has been spare capacity in the shipping-freight industry to respond to the difficulties, which has bought us some time," said William Bain, who held the position of head of trade policy at the British Chamber of Commerce. "But our research suggests that the longer the current situation persists, the more likely it is that the cost pressures will start to build."
Exporters, retailers, wholesalers, and manufacturers were more likely than other businesses to be feeling the impact, according to the findings of the BCC. This resulted in some businesses being unable to meet their customers' demand for goods and components for manufacturing lines, as well as experiencing challenges with their cash flow.
As a result of rerouting cargo around the Cape of Good Hope, which is located at the southernmost tip of Africa, delivery dates were extended by an additional three to four weeks, according to the BCC. Additionally, several companies reported that the cost of container rental had increased by more than 300 percent.
Warings Furniture, which imports interior dcor for bars and restaurants, is owned and operated by Rachael Waring, who is the managing director of the company. She stated that the dispute has been harming her business since before Christmas.
"We have had to budget for additional costs because the quotes we are getting for containers have been significantly higher," she said in an interview with the BBC's Wake Up To Money program.
She is also providing additional services to customers in order to compensate for the delays. However, she is hoping to mitigate some of the cost increases by negotiating cheaper rates with the Chinese manufacturers from whom she obtains her supplies. Additionally, she is hoping to prevent any additional price increases for her clients if she is able to do so.
Under the current circumstances, the Business Council of Canada (BCC), which represents more than 50,000 businesses across its network, has expressed its desire to see additional government assistance for exporters. This support would include the establishment of an exports council to encourage trade.
"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," according to Mr Bain.
Following the beginning of the confrontation between Israel and Hamas in October, the Houthis have launched attacks against commercial vessels that are transiting through the Red Sea during that time. The group that is supported by Iran has stated that it is targeting ships that are connected to Israel, the United States, and the United Kingdom in order to provide support to Hamas.
Air attacks have been carried out by the United States and the United Kingdom against Houthi targets in Yemen.
The waterway that travels the shortest distance between Asia and Europe is the Red Sea. Several major shipping companies, such as Mediterranean Shipping Company and Maersk, have rerouted their vessels to take the far more time-consuming route that goes around the Cape of Good Hope in Africa and then continues up the western side of the continent. However, this has resulted in an increase in expenditures, especially those associated with insurance, as well as delays.
Earlier this month, Tetley, which is one of the most well-known tea brands in the United Kingdom, issued a warning that supplies were "much tighter" than it would like. Yorkshire Tea, which is a competitor, also stated that it was closely watching the situation.
As part of their annual survey, which took place between the 15th of January and the 9th of February, the BCC received responses from more than one thousand businesses.
90% of those who responded were small businesses, which are defined as having fewer than 250 employees.
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