Non-food retailers and suppliers are preparing for possible price rises and even product shortages in the spring, as the unrest in the Red Sea continues.
A source with understanding of the situation said electricals, fashion and furniture retailers are worrying about the potential knock-on effects of the attacks on container ships feeding through to UK customers by the beginning of spring.
“Price rises are most likely going to be felt in non-food categories because of the delays in shipments caused by them all having to re-route around the Cape of Good Hope,” they said.
“The cost of shipping containers from China to Europe in general has shot up as well, which is adding to the cost pressures.
“Also, there are going to be problems with the containers being in the wrong place, due to the added time it takes to go around the Cape. It’s adding 10 days each way to a trip and the knock-on effect on getting the containers back is huge.”
The source said grocers and FMCG brands were “not concerned” and said they had seen “no signs” of food inflation climbing as a result of the attacks.
The warning came on the same day that Danish container shipping giant Maersk warned its customers to prepare for significant disruption. The company said it would be diverting all its vessels away from the Red Sea “for the foreseeable future”.
The problems began in December when Iranian-backed Houthi rebels in Yemen began attacking vessels in the Gulf region in support of Hamas.
The Red Sea route is the shortest from Asia to Europe, via the Suez Canal, and shipping companies are being forced to re-route their ships around Africa’s Cape of Good Hope – adding at least 10 days to shipping times and added costs in crew time and fuel.
Retail holds its breath
While UK retailers’ plans for Christmas and new year were largely unaffected by the attacks in the Red Sea, some bosses have warned of potential issues if the situation persists.
Next chief executive Lord Wolfson said this week that the disruption could add an extra two or two-and-a-half weeks to stock lead times if ships are forced to continue bypassing the Red Sea.
He added that “some delays to stock deliveries” would be likely in the early part of this year if the situation continues.
“Because the ships have to travel further, there will be some level of surcharges. It will impact on sales if this persists for a long time but not dramatic levels,” he told PA.
The Cotswold Company boss Ralph Tucker told Retail Week: “The situation in the Red Sea presents some minor challenges at the moment. If the situation gets worse that’s different, but for now, it’s more than manageable.
“We have quite a big stock holding in the UK and that helps. Because we had such a good Christmas trading period, we’d already responded a little and we’ve got quite a lot of product around the Cape and pretty much in.
“We’re feeling like it will be an issue for the next three to six months but we’re hopeful and don’t see it being as widespread as the previous supply chain crisis.”
A spokesman for a large electricals retailer said it was “seeing very little disruption” and had “good, healthy stock levels at the moment post-peak trading”.
However, he added: “Some suppliers and lines may be facing small delays in shipping of between seven and 14 days [but] there should only be a minimal impact, given we hold circa six to eight weeks cover on inventory.”