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industry focus

European retail trade body calls for action on Red Sea crisis

An international trade body representing the retail and wholesale industry in Europe has called for EU member states to address the Red Sea crisis that is impacting trade. 

In an open letter to Hadja Lahbib, the minister of foreign affairs of Belgium, the director general of EuroCommerce Christel Delberghe wrote that he was concerned about the escalating attacks by the Iran-backed Houthis on commercial vessels. 

EuroCommerce members include national associations in 27 countries and five million companies. Supermarkets such as Aldi, Edeka and Auchan are members along with fashion retailers H&M and Inditex. 

Since November last year, Yemen's Houthi rebel group has targeted vessels passing through the strait of Bab al-Mandab which separates north-east Africa from Yemen. The group claims to be targeting vessels with connections to Israel following the start of the war in the Gaza Strip. 

The Red Sea trade route through the Suez Canal moves 12 per cent of the world’s trade and is worth around $1 trillion. To ensure the safety of crew and cargo Delberghe said carriers are diverting to alternative routes around the Cape of Good Hope resulting in increased shipping time, labour costs and fuel consumption. 

Congestion in the region has increased as a result of the attacks, with many retailers seeing shipping costs soar. 

Delberghe warned that these issues could be exacerbated later in the year as shipping around the Cape of Good Hope is “more challenging in the winter months”, while there is also reduced access to the Panama Canal which is suffering from drought. 

He also said that retailers are unable to plan trade flows, which is even more disruptive to trade of seasonal or perishable products. 

Alternative options for shipping goods from and to Asia, such as air cargo, have considerable costs and higher CO2 emissions which make them unviable. 

“We emphasise that the effects of the attacks in the Red Sea have already had massive impacts on businesses,” Delberghe wrote. “However, we also underscore the potential for further adverse consequences if these attacks persist. 

“The longer carriers are forced to reroute, the more businesses, and ultimately consumers, will suffer from additional costs adding to the already high costs of living in Europe.”

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