Retailers demand more action from EU to resolve Red Sea crisis


European retail industry body Eurocommerce called on European Union institutions and member states to resolve the Red Sea crisis that has disrupted trade, saying in a letter to Belgium’s foreign minister that it has already had “massive impacts” on businesses.

Shipping companies have rerouted container vessels away from the Red Sea to avoid Houthi militant attacks that have multiplied since early December, disrupting supply chains for firms reliant on the Suez Canal to get products from Asia to Europe.

Eurocommerce members include supermarket giants Ahold Delhaize, Carrefour, Lidl, M&S, and Tesco, and fashion retailers H&M, Inditex, and Primark.

The impact on consumers

“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,” Eurocommerce said in the letter.

Danish frigate Iver Huitfeldt sets off for the Gulf of Aden, from the Naval Station in Korsoer, Denmark, January 29, 2024. The Danish frigate will contribute to strengthening maritime security in and around the Red Sea. (credit: RITZAU SCANPIX/MADS CLAUS RASMUSSEN VIA REUTERS)

Retailers who source from factories in China and South-East Asia have faced delays and cost increases as the alternative shipping route around Africa’s southern tip takes 2-3 weeks longer, resulting in higher fuel and labour expenses.

The disruption has raised fears that inflation will take longer to unwind in Europe, at a time when cash-strapped consumers were looking forward to prices of food and clothes starting to ease.

“Given the magnitude of the impacts on businesses and the global supply chain, we appeal for continued intensified and coordinated efforts by the EU institutions and Member States to address the situation,” Eurocommerce said.

The group said it supports EU initiatives that aim to protect commercial ships and seafarers against attacks. The EU is set to launch a joint Red Sea naval mission this month.