Red Sea attacks: Why UK deliveries may be delayed as shops brace for price hikes
Business and Economics Editor Joel Hills discusses the possible ramifications of the airstrikes on the British economy
Attacks by Houthi rebels on ships in the Red Sea have seen deliveries halted by some of the world's largest shipping firms.
But though the incidents, which have seen drone attacks and ships being seized, happened nearly 4,000 miles away they still could impact British shoppers.
Vessels carrying goods, which are to be sold on UK high streets, are being rerouted around the southern peninsula of Africa to escape missile bombardment.
The diversion is adding thousands of miles to journeys, which is driving up costs for companies and causing delays in the supply chain.
Brands, such as electric car maker Tesla which has temporarily shut its Berlin factory due to delays in deliveries, are fearing the waits will drive up prices.
On Thursday, following weeks of attacks, the UK and the US launched a retaliatory strike - bombing more than a dozen targets in Houthi-controlled areas of Yemen. It has sparked fears tensions in the region could escalate.
Here is how the crisis unfolded, the impact it is having on shipping, global trade and how it could impact British shoppers as supermarket bosses share fears over the attacks.
What is happening in the Red Sea?
For weeks, the Yemen-based Houthi rebels, who support Hamas in its war with Israel, have claimed responsibility for attacks on commercial shipping vessels in the Red Sea.
Since November, they have targeted boats in the Red Sea more than 20 times using missiles, drones, fast boats and helicopters. They have claimed - often falsely - the ships were linked to Israel.
Their attacks are aimed at ending the Israeli air-and-ground offensive in the Gaza Strip, which was triggered by proscribed terror group Hamas' attack in southern Israel on October 7.
The war has entered enter its fourth month, with heavy combat having killed more than 21,000 people in Gaza as the IDF vowed to "wipe out" Hamas.
What has been the response?
British and American militaries bombed more than a dozen targets in Houthi-controlled areas of Yemen on Thursday.
The strikes, coming from air and sea, were both a symbolic move and intended to weaken the military capabilities of the rebel group.
Prime Minister Rishi Sunak said the strikes were "limited, necessary and proportionate action in self-defence."
Meanwhile, US President Joe Biden added the strikes were meant to demonstrate that the US and its allies “will not tolerate” the militant group’s ceaseless attacks.
He said they only made the move after attempts at diplomatic negotiations and careful deliberation.
The Ministry of Defence (MoD) targeted Houthi rebels in a series of air strikes, coordinated with the US, overnight
Why is the Red Sea important for trade?
The Red Sea is sandwiched between the Suez Canal and Indian Ocean, and helps to make up one of the busiest shipping lanes in the world.
About 30% of all global container shipping passes through the gateway between the East and the West, with it being particularly used to transport goods from Asia and east Africa to Europe.
Shipping firms having to reroute means sending vessels around Africa’s Cape of Good Hope, which is more than 6,000 kilometres longer and can add between 10 and 14 days to journey times.
Lengthier shipping times could result in pressure on European ports as well as soaring costs.
How has this impacted shipping and its prices?
Aside from the threat of attack, the two key issues the shipping industry faces are price and delivery time.
The cost of shipping goods has soared in recent weeks, which is likely to have a knock on impact to their retail price.
At the beginning of November 2023 it cost $1,500 to ship a container from China to Northern Europe, on Tuesday it would cost $4,000. But that is still far from the $14,000 seen during the pandemic.
This is causing up to a two-week delay to deliveries to British supermarkets.
Simon Roberts, chief executive of Sainsbury's, said shipments of wine and general merchandise, which includes electricals, were among those facing delayed journeys.
“The vast majority of container ships are instead going around the Cape of Good Hope which is making journeys ten to 14 days longer."
The boss of shipping giant Maersk warned earlier this week there are concerns it could take months to reopen the route and urged the international community to do more so that shipments could use the trade route.
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The number of containers passing through the Red Sea fell by more than half in December, to around 200,000 from 500,000 in November.
The current level is 66% lower than the pre-pandemic 2017-2019 average, according to the trade indicator compiled by Kiel Institute for the World Economy in Germany.
The delays contributed to a 1.3% decline in world trade in December, reflecting goods stuck on ships rather than being offloaded in port.
How could it impact your weekly shop?
Concerns are mounting across the retail sector over the impact of the Red Sea shipping woes on costs, with fears it could push up prices for UK shoppers, with supermarkets including Tesco, Sainsbury's and M&S speaking out.
The boss of retail giant Next has warned the attacks could delay stock deliveries and impact sales.
Lord Simon Wolfson, chief executive of Next, said it will "impact on sales if this persists for a long time, but not dramatic levels".
Tesco boss Ken Murphy cautioned that disruption caused by attacks from rebels near the Red Sea could lead to more inflationary pressure on Thursday. “Having to go around Africa to get to Europe extends shipping times, constrains shipping space and moves up shipping costs,” Mr Murphy said. “It could inflate the cost of some items but we just don’t know at the minute and don’t know how long the situation will last.” Marks & Spencer chief executive Stuart Machin said: “Our plan is not to increase prices in clothing and home – yes, there may be some cost increases to us from the Red Sea issue, but it’s a bit too early to call that out yet.”
What does it mean for energy costs?
Around 12% of seaborne oil and 8% of liquified natural gas (LNG) typically pass through the Suez canal.
Oil prices have risen significantly as a result, with the price of Brent crude oil up by around 7% since attacks first started last month.
Gas prices have remained broadly steady because of inventories in Europe but could lift if further disruption continues.
Over the past year, energy and fuel prices have come down noticeably following a spike driven by the Russian invasion in Ukraine but both household energy and petrol costs could be impacted by rises to commodity prices.
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