Marco Forgione, Director General of the Institute of Export and International Trade, has recently commented on the repercussions of shipments being rerouted around South Africa.
“The impact of the rerouting of shipping around South Africa’s Cape of Good Hope due to attacks in the Suez Canal over the last month will be felt by consumers in the coming weeks, with the prices of many products rising imminently following weeks of delays in products arriving in the UK.
“We face an uncertain and potentially difficult period, with items including fruit, meats, seafood, grains, wine, tea, coffee, and clothing and key ingredients such as palm oil and energy costs all impacted by delays and knock on disruption to supply chains, which could take months to resolve. Whilst it’s impossible to predict precisely how prices will rise over the coming weeks and months, it is inevitable that we will see the price of products on our shelves being impacted. Key indicators such as oil, wheat and rice have already increased by 5%.
“Anticipated inflation of certain items, particularly those from outside the EU, is expected due to both shortages and spoilage of fresh goods with limited shelf life. While retailers are working to manage the impact of price rises, other challenges in 2024 are also at play: transportation and shipping insurance costs have skyrocketed – doubling over the past few weeks – and with business rate rises and new border checks coming in, markets are preparing for a prolonged period of uncertainty and disruption.
“We are also seeing these delays impacting shipping base rates – which is how much it costs to ship a container – with rates for goods traveling from Asia to both Europe and the US increasing. Some of the biggest shipping firms, including Maersk, are also imposing extra fees, known as surcharges, in order to mitigate the re-routing of ships around Africa.
“The current situation unfortunately looks as though it will escalate with the UK Defence Secretary suggesting UK is considering attacks on Houthi positions in Yemen, as part of the Operation Prosperity Guardian coalition, and Iran sending a naval vessel to the Red Sea. If the situation does escalate Iran could threaten shipping transiting the straits of Hormuz further impacting global energy prices.”
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