More than half of UK businesses and manufacturers have seen increased costs and delays to shipments as a result of the ongoing attacks on shipping containers in the Red Sea, according to new research.

container ship

Ongoing disruption in the Red Sea is impacting more than half of UK businesses

More than half (53%) of manufacturers and B2C service businesses, including retailers, have been affected by the disruption, the British Chambers of Commerce (BCC) has reported.

In the BCC’s latest survey, which included 1,087 businesses, 55% of UK exporters also said they had been impacted by the unrest.

A hike in costs and delays to shipments were cited as the two main impacts faced by businesses in the report.

The research showed that some companies have seen an increase of 300% for shipping container hire, while logistical delays have added between three and four weeks to delivery times.

Retailers and businesses who participated in the survey added that they had seen other knock-on effects including “cashflow difficulties and component shortages on production lines”.

BCC head of trade policy William Bain 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 Office for National Statistics 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 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. 

“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.”

The news comes as Retail Week reported that Matalan is facing stock issues as a result of the Red Sea attacks, while fast-fashion giants Asos and Boohoo are increasingly relying on nearshoring in a bid to navigate the challenges.

Pepco Group also recently spoke out about the ongoing unrest and said it is leading to “elevated spot freight rates and delays to container lead times”. The group, which owns Poundland, added that prolonged issues could impact supply over the coming months.