Sunday, April 14, 2024

Red Sea disruption causes severe headaches for UK businesses

Increases in costs and delivery times caused by shipping disruption in the Red Sea are causing headaches for UK businesses according to new research by the British Chambers of Commerce.

Issues cited by firms included increased costs, with some reporting rises of 300% for container hire, and logistical delays, adding up to three to four weeks to delivery times. Firms also said this was creating knock-on effects such as cashflow difficulties and component shortages on production lines.

William Bain, Head of Trade Policy at the BCC, said: “This research gives us 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. And recent ONS 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.

“Certain sectors of the economy are obviously more exposed to this than others. But with the recent introduction of the Government’s new customs checks and procedures for imports also adding to costs and delays, it is a difficult time for firms.

“The UK economy saw a drop in its total good exports for 2023, and with global demand weak, there is a need for the Government to look at providing support in the March Budget.

“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.

“Overseas trade is vital to growing our economy. We must do everything we can to see businesses through these tough times, and then set a laser-sharp focus on expanding exports for the future.”

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