Retailers warn of delays after Red Sea attacks

Leading retailers including IKEA and NEXT have warned that the diverting of vessels aways from the Suez canal and around southern Africa will result in delays and may restrict the availability of certain products.

Re-routing container ships around Africa adds 3,500 nautical miles to a typical journey from Asia to Europe and potentially adds three or four weeks to product delivery times and with delays to deliveries threatening the availability of some products retailers are evaluating other supply chain options.

The problems have not impacted Christmas or New Year sales stock, which arrived more than a month ago, but could squeeze spring trade if not resolved shortly.

While it is not yet clear what impact late deliveries will have, it is possible that the problems could renew pressure on inflation, which has fallen to 3.9% in the UK, with the disruption already putting pressure on oil prices.

In the short term retail goods will take longer to be shipped, as they are redirected via longer routes, which means a knock-on impact to availability and prices as a result of higher transportation and shipping insurance costs.

About 19,000 ships navigate the Suez canal every year, which represents about 30% of global container traffic, so the diversion accounts for about 23.5% of current global container traffic.

The Suez Canal is consequently one of the world’s key trade routes, particularly for goods moving between Asia and Europe, and the disruption comes at a time when many retailers are trying to move orders ahead of Chinese New Year in February, when factories will close.

Some retailers have warned that with container shipping costs increasing due to the disruption, prices in the shops could rise further. 

The London Textile Fair took place this week with 300 global manufacturers including from Europe, Pakistan, Vietnam and China exhibiting.

Manufacturers have been wary about the additional expenses incurred as a result of the African diversion, with shipping costs increasing between 20% and 400%, although it appears that many retailers are taking on the surcharges. 

A number of UK retailers are instructing their vendors to ship all orders by air freight and are covering the extra costs.

Despite the Red Sea challenges the retailer and manufacturer feedback from the fair has been largely positive, with production prices in many regions stabilising compared to last year and buyers optimistic, as economic pressures ease.

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Our unique blend of experience, systems and processes means that we can introduce new methods and efficiencies to optimise global inventory, reduce shipping costs and streamline the entire supply chain. 

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