Attacks on shipping in the Red Sea will mean “inevitable” extra costs to UK food companies and threaten a rise in food inflation, the IGD has warned.
The crisis in the key shipping route lining the Mediterranean via the Suez Canal has sparked military and political action by the US and other governments, with many shipping companies routing their vessels around the Cape of Good Hope, rather than risking the usual Red Sea route.
In a briefing released yesterday, the IGD said the move had added thousands of miles to journeys, increasing costs and creating delays, therefore reducing shipping capacity on the route.
It said events in the Red Sea region were unlikely to impact food security significantly in the short term, with the volume of food goods coming via the Suez Canal likely to be fairly minor overall – although it includes some important categories such as coconut milk, exotic fruits and spices.
It added companies that are affected have likely already started to adapt supply chain arrangements in light of the conflict in the Middle East, and noted even the stranding of the container ship the Ever Given in the Suez Canal in 2021 had little effect on the UK food market. However, IGD warned longer-term if the attacks continued, the impact would inevitably be passed on to consumers.
“A large part of global container and energy trade goes via the Suez Canal,” said the report. “Longer journey times or increased risk would likely be paid for by shoppers at some point, creating inflationary effects.
“This is bound to have some impact on the UK economy and UK consumers, although probably quite unclear and hard to measure, occurring over multiple categories.
“Food businesses in the UK would certainly be exposed to higher costs for energy, chemicals and packaging, especially primary producers.”
IGD’s warning follows that of the BRC, which said disruption could have a knock-on effect on product availability and prices.
CEO Helen Dickinson said this was “as a result of higher transportation and shipping insurance costs”.
“Over the coming months, some goods will take longer to be shipped,” she added.
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