Red Sea disruption could hit spring drops

Asia-produced spring fashion could be slow in getting to UK stores, hitting profits as deliveries continue to be hit by Red Sea shipping attacks.

Rating agency Moody’s has warned European fashion retailers’ new stock could be thin on the racks as attacks on vessels in the Red Sea continue to disrupt ships containing that stock.

The warning comes as Houthi militia continue to launch missiles at ships in the Red Sea as joint UK/US attacks fail to stem the level of attacks on shipping, forcing firms to take the longer journey around the Cape of Good Hope.

According to The Telegraph, several of the world’s biggest shipping companies have announced plans to avoid the Red Sea “indefinitely”, rerouting vessels around Africa. The change can add weeks to journey times and has pushed up shipping costs.

Moody’s said: “If shipments aren’t rerouted quickly, then the prompt delivery of spring/summer fashion collections is potentially at risk.”

However, consumers could enjoy further discounts if the crisis drags on. Stores will likely be forced to cut prices on items they receive late if they are “out of season”, Moody’s said.

The delays will also have a “material impact on profitability”, Moody’s said.

Freight rates have surged by more than 114% since December and are 132% higher than in 2019. Contracts are typically agreed annually, meaning retailers could be forced to lock in higher prices, the report said.

A drought also affecting the Panama Canal is adding to shipping woes, causing delays on another key international trade route.