New research by the British Chambers of Commerce’s (BCC) Insights Unit has uncovered the scale of the impact on UK businesses caused by the disruption to shipping in the Red Sea.
The study found that more than half (55%) of UK exporters say they have been affected by the shipping issues. Over half (53%) of manufacturers and business-to-consumer service firms, such as retailers, also reported being impacted.
The main effects cited by businesses are increased costs and delays. Some firms reported rises of up to 300% for container hire, while others said delivery times have been extended by three to four weeks. This is creating knock-on effects like cashflow difficulties and component shortages on production lines.
In total, 37% of the 1,087 businesses that took part in the BCC’s latest Business Outlook Survey, conducted online between 15th January and 9th February, said they had been affected by the shipping disruption.
The BCC Insights Unit, launched on 3 July 2023, brings together research strands including the Quarterly Economic Survey, the UK's largest private sector business survey, to inform the national economic debate.
William Bain, Head of Trade Policy at the BCC, 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 ONS 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 good 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.