Britons could face serious price rises and shortages of major household items such as white goods, sofas, garden furniture and barbecues this summer due to rising shipping costs following Houthi rebel attacks on ships in the Red Sea.
The price of global shipping containers rose by more than 300 percent between November 2023 and January as the chaos forced many companies to shift routes to longer and much more expensive shipping lanes.
Buy It Direct Group chief executive Nick Glynne told BBC Radio 4: ‘The vast majority of our products come from the Far East and we are hugely influenced by freight prices.’
He explained that large household items now not only cost more but are also becoming prohibitively expensive to ship simply because they require larger containers.
“This will have a significant impact on end-user prices,” Glynne said, warning that there is likely to be a significant shortage of such items.
It comes after supermarket giant Sainsbury’s warned consumers they could struggle to find tea on supermarket shelves due to ‘nationwide supply issues’ linked to disruption to Red Sea shipments.
Marco Forgione, director general of the Institute for Export and International Trade, told MailOnline that CPI inflation could rise by as much as four percent if the conflict continues or escalates.
This could add 10 cents to the price of a stick of butter, 12 cents to a jar of Marmite and 9 cents to a six-pack of eggs. A pack of 240 Pg Tips tea bags could rise by 19p to £4.98 and a pack of Heinz baked beans by 15p to £3.90.
The price of global shipping containers increased by more than 300 percent between November 2023 and January due to the chaos in the Red Sea
It is understood that the supply problems, which are partly linked to the attacks on cargo boats by Houthi rebels (pictured) in Yemen, are specifically linked to just one supermarket tea supplier.
Britons could face serious price rises and shortages of major household items such as white goods, sofas, garden furniture and barbecues this summer
Large household items now not only cost more, but are also becoming prohibitively expensive to ship simply because they require larger containers
Freight companies must take alternative routes to avoid the Suez Canal after militant attacks
Mr Forgione told MailOnline: ‘Consumers will see slightly three impacts: price rises, inflation and the possibility of scarcity.
“If things continue like this and there is an escalation, you could see a CPI increase of somewhere between three and four percent.
‘Inflation at this time will take place on products coming through the Red Sea, such as wheat, corn, clothing and palm oil.
“If you look at the more general CPI, the basket of goods includes products that are not directly affected, but even those will experience price pressure as global shipping costs rise.”
Tesco, Next and Ikea were three of the biggest companies to warn earlier this year of possible price rises as Houthi rebel attacks intensified.
Tesla, meanwhile, was forced to close its Berlin gigafactory due to a parts shortage.
Elon Musk’s company warned that this could result in as many as 7,000 vehicles not being built.
The owner of Volvo and Lotus also fears delays in the delivery of EV models in Europe.
Extra shipping costs are already being passed on to British consumers, with an estimated 30 percent of trips that would normally have crossed the Red Sea being diverted.
Red Sea transit, from the Suez Canal to the Bab el-Mandeb Strait, is a crucial shipping route for global trade.
But many of the world’s leading shipping companies, including Mediterranean Shipping Company and Maersk, are resorting to using it Cape of Good Hope across the Suez Canal as they attempt to find safer passage for their cargo and crew.
This much longer route adds an extra 3,500 miles to the journey and costs up to £800,000 per boat.
And Glynne told BBC Radio 4 that ships could take four weeks longer to complete the route.
Michelle Wiese Bockmann of Lloyds List told BBC Radio 4: ‘This has caused massive disruptions to logistics supply chains. “Strikes are needed to return the logistics supply chain to normal, but the risk appetite for Red Sea transit is being reassessed on a day-to-day basis – it is so volatile.”
Marco Forgione, director general of the Institute for Export and International Trade, told MailOnline that CPI inflation could rise by as much as four percent if the conflict continues
Last month, a Houthi military helicopter flew over the Galaxy Leader cargo ship in the Red Sea
The Suez Canal is used by roughly a third of the world’s container ship cargo and it is estimated that around 350 ships are diverted around Africa. Pictured: Maersk pictured in Suez, Egypt, December 2021
A map of Yemen including the area controlled by the Houthi rebels
Footage taken of an RAF typhoon over Yemen, showing a targeted attack
About 12 percent of world trade typically passes through the waterway dividing Africa and the Arabian Peninsula, including oil, natural gas, grain and everything from toys to electronics.
Susannah Streeter, head of money and markets at financial services firm Hargreaves Lansdown, said: ‘With major manufacturers and retailers warning of significant delays to products and components, the price of a wide range of goods is at risk of rising again.’
And last month, the former head of the British military warned that the conflict has exposed the “fragility of global supply chains.”
General Lord Richard Dannatt said Britain has a responsibility to intervene to protect global trade.
“Let’s not forget that Britain and the US are five of the permanent members of the UN Security Council, so there is a responsibility for those permanent members to take action to protect our global interests,” he told the BBC.
‘And in this case, the fragility of global supply chains is being exposed by what is happening in the Red Sea.
‘And that is why it makes sense that action is taken to ensure that world trade can continue, prices do not skyrocket and production and retail can continue as much as possible.’