UK supermarkets Tesco and M&S have issued statements warning of potential price hikes as a direct result of the Red Sea air strikes, while Sainsbury’s maintains contact with Government to “mitigate Red sea impact”.
Militia group Houthis have targeted shipping vessels in the Bab al-Mandab Strait and the southern Red Sea, with the United States and Britain responding to attacks by carrying out air strikes on Houthi military targets in Yemen.
As a result of the strikes on the vessels, UK supermarkets have been in contact with Government to discuss the direct impact on shipping times and costs. Additionally, oil prices have risen by 4%.
Rerouted vessels will go around the Cape of Good Hope in South Africa, which is expected to increase the cost of fuel by up to $1 million (£786,000) each round trip, according to data analytics firm Everstream Analytics.
Shipping data company Veson Nautical said that the alternative route would take vessels an extra eight and a half days to reach their destination.
In a call with journalists on Thursday 11th January 2024, chief executive of Tesco Ken Murphy said: “If they do have to go the whole way around Africa to get to Europe, it extends shipping times, it constrains shipping space and it drives up shipping costs.”
He said the strikes “could drive inflation on some items”, but ultimately said “we just don’t know.”
“We don’t have as much product coming through the channel as other people do,” said Murphy. “And then we have alternative sources of supply if we need them.”
M&S chief executive Stuart Machin said on Thursday that M&S was “conscious of the costs and more importantly the availability of new ranges”, and that it was “something that’s impacting everyone and it’s something we’re very focused on”. The retailer noted that the strikes “may add costs to the business”.
Simon Roberts, CEO of J Sainsbury Plc, told journalists on Wednesday that Sainsbury’s was “working closely” with UK Government to “mitigate the Red Sea impact”.
Oil prices rise
Additionally, oil prices have risen by 4%, with Prime Minster Rishi Sunak telling BBC News that the attacks had caused “major disruption to vital trade route and higher commodity prices”.
A statement from 10 Downing Street said that the attacks were “threatening UK and other international ships, causing major disruption to a vital trade route and driving up commodity prices”, and went on to say the UK will “stand up for freedom of navigation and the free flow of trade”.
It was also reported that Brent crude reached $80 for the first time this year, but that it remained below high prices witnessed during the conflict between Russia and Ukraine.
