Red Sea attacks spark higher shipping cost fears

The kiwifruit industry may be impacted with exports taking longer to reach international markets. Photo: Susan Murray/RNZ.

New Zealand consumers could soon pay the price for shipping networks being disrupted by attacks in the Red Sea.

In recent weeks there have been several attacks by Iran-backed Houthi rebels on container ships travelling through the busy cargo route.

Nearly 15 per cent of global seaborne trade passes through the Red Sea, which leads to the Suez Canal, linking the Indian Ocean with the Mediterranean.

New Zealand and 11 other countries have issued a joint statement calling for an immediate end to attacks on container ships in the Red Sea.

Massey University supply chain lecturer Carel Bezuidenhout says the conflict means that passing through the Red Sea is pushing up insurance costs for shipping companies.

"Most of them are actually avoiding that and taking the longer route around the Cape of Good Hope down at the bottom end of Africa. That adds substantial distance and delays to the supply chains, so in time we may start seeing a slower and non-responsive supply chain."

Bezuidenhout says all industries could be impacted if the conflict continues, but some sectors - like the kiwifruit industry - might be hit particularly hard.

"When we start harvesting kiwifruit and we want to get those fruit to Europe as fast as possible, then it is going to become problematic for us to add another two weeks to get around the Cape of Good Hope."

He says uncertainty around when the attacks will end, makes the situation worse.

"We don't know when it will be safe enough or when our insurance will allow us to actually get back into the Red Sea and actually start making commercial sense to run through that space."

Maritime Union national secretary Craig Harrison says shipping companies might charge more to cover the increased cost of moving goods.

"I wouldn't be surprised if the shipping companies want to up their freight rates."

Harrison told RNZ port companies will be keeping an eye on events in the region.

"I think the ports will be concerned if they see a drop in trade and if costs go up but I think at the moment they'll be analysing what's going to happen."

Retail NZ chief executive Carolyn Young says the attacks on ships could have flow-on effects.

"With the longer voyage that they have to take to miss the conflict that's happening there's some likely increases in costs that could be passed on to business owners and consumers."

Young says they will talk to businesses about dealing with any disruptions to the supply chain.

She says they have seen conflict have an impact on shipping in the past - such as at the start of the Ukraine war.

"A number of ships were having to divert their cargo into a different pathway due to the conflict that was happening in various areas and that did put pressure on timing of goods coming to New Zealand and the cost of goods getting here."

A Zespri spokesperson says, via a statement: "Our kiwifruit is shipped to Europe using the Panama Canal and isn't routed through the Red Sea. Each season we work closely with our longstanding shipping partners to deliver our fruit using a mix of charter and container vessels.

"We will continue to monitor the global shipping environment closely including the potential impact on other routes as we prepare for our first fruit to depart for Europe in mid-March."

-Nick James/RNZ.


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