Shipping costs have risen by more than 300% since November amid the disruption caused to freight in the Red Sea from attacks, according to fresh data.
Just hours after US and UK-led attacks on Yemen aimed at preventing renewed assaults on shipping by Iran-aligned Houthi rebels, it was revealed that freight prices continued to rise over the past week.
The most widely used measure of freight cost, the Shanghai Containerised Freight Index (SCFI), hit $3,101 (£2,429) per container from $2,871 (£2,249) last Friday, according to data given to Sky News by global logistics company DSV.
It meant that the SCFI, which measures the average cost of a 20ft-long container being shipped from Shanghai to Europe, was 310% up on the level seen at the start of November.
Marked increases started to be felt in the second half of that month as the Red Sea crisis intensified.
There have been more than two dozen attacks by Houthis on shipping, forcing major container and energy firms to re-route around Africa, avoiding the Suez Canal.
That adds many costs to freight.
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2:55
Minister: Houthi strikes were ‘self-defence’
Insurance bills are up as a result while journeys can take more than 10 days extra.
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Staff wage costs have risen as a result and additional fuel must be burned.
Another factor at play is an increase in demand for goods ahead of disruption caused by the Chinese Spring Festival – the country’s New Year holiday which gets under way next month.
Yemen’s Houthi rebels have stepped up attacks on vessels it believes are heading into and out of Israel, claiming they are aimed at ending the air and ground offensive on the Gaza Strip following the 7 October attacks by Hamas.
US and UK forces attacked several targets in an air operation on Thursday night in a bid to prevent further boat and drone-led attacks on shipping.
They fear damage to the global economy due to the delays and additional costs associated with avoiding the Suez Canal.
Many of the world’s largest shipping companies – including MSC, Maersk, CMA CGM, and Hapag-Lloyd – are still diverting many if not all planned Red Sea journeys via South Africa.
While many major companies, including Tesco in the UK, have said they are not experiencing damage from the disruption, other firms have been more vocal about the challenges.
IKEA, for example, has admitted that some products may not be available while Tesla revealed on Friday that it was pausing production at its factory in Germany for two weeks due to a shortage of parts.
While shipping costs are up markedly, they remain below the highs seen in March 2021 when the Ever Given container ship blocked the Suez Canal.
Nevertheless, the disruption has caught the eye of the governor of the Bank of England, who is charged with keeping the pace of price rises in check.
Andrew Bailey will be mindful that raised shipping prices are an inflation risk as higher shipping costs are likely to be reflected in consumer bills as they are passed down the supply chain.
It’s a headwind he could do without as the inflation rate has been brought down substantially from 40-year highs in the wake of the price spike caused by Russia’s invasion of Ukraine.
He told a committee of MPs this week: “We’ve certainly seen, as best we can tell from the monitoring, shipping traffic is being affected and is being rerouted.
“That will increase shipping prices and shipping costs. I think initially that will be an issue in the monetary policy world.”
Oil costs rose by 2% on Friday following news of the US/UK-led action on speculation of the implications for Middle East stability.
Rosalie Chen, analyst at Third Bridge, said of the situation: “Our experts estimate that the current freight rates on the Europe route have reached their peak, as they already reflect the additional costs of bypassing.
“Even if all Europe route shipping companies choose to bypass the Cape of Good Hope, our experts do not believe it will cause a significant supply-demand gap.”
Bosch will cut up to 5,500 jobs as it struggles with slow electric vehicle sales and competition from Chinese imports.
It is the latest blow to the European car industry after Volkswagen and Ford announced thousands of job cuts in the last month.
Cheaper Chinese-made electric cars have made it trickier for European manufacturers to remain competitive while demand has weakened for the driver assistance and automated driving solutions made by Bosch.
The company said a slower-than-expected transition to electric, software-controlled vehicles was partly behind the cuts, which are being made in the car parts division.
Demand for new cars has fallen overall in Germany as the economy has slowed, with recession only narrowly avoided in recent years.
The final number of job cuts has yet to be agreed with employee representatives. Bosch said they would be carried out in a “socially responsible” way.
About half the job reductions would be at locations in Germany.
Bosch, the world’s biggest car parts supplier, has already committed to not making layoffs in Germany until 2027 for many employees, and until 2029 for a subsection of its workforce. It said this pact would remain in place.
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The job cuts would be made over approximately the next eight years.
The Gerlingen site near Stuttgart will lose some 3,500 jobs by the end of 2027, reducing the workforce developing car software, advanced driver assistance and automated driving technology.
Other losses will be at the Hildesheim site near Hanover, where 750 jobs will go by end the of 2032, and the plant in Schwaebisch Gmund, which will lose about 1,300 roles between 2027 and 2030.
Its remaining German plants are also set to be downsized.
While Germany has been hit hard by cuts, it is not bearing the brunt alone.
Earlier this week, Ford announced plans to cut 4,000 jobs across Europe – including 800 in the UK – as the industry fretted over weak electric vehicle (EV) sales that could see firms fined more for missing government targets.
Cambridge University’s wealthiest college is putting the long-term lease of London’s O2 arena up for sale.
Sky News has learnt that Trinity College has instructed property advisers to begin sounding out prospective investors about a deal.
Trinity, which ranks among Britain’s biggest landowners, acquired the site in 2009 for a reported £24m.
The O2, which shrugged off its ‘white elephant’ status in the aftermath of its disastrous debut in 2000, has since become one of the world’s leading entertainment venues.
Operated by Anschutz Entertainment Group, it has played host to a wide array of music, theatrical and sporting events over nearly a quarter of a century.
The opportunity to acquire the 999-year lease is likely to appeal to long-term income investment funds, with real estate funds saying they expected it to fetch tens of millions of pounds.
Trinity College bought the lease from Lend Lease and Quintain, the property companies which had taken control of the Millennium Dome site in 2002 for nothing.
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The college was founded by Henry VIII in 1546 and has amassed a vast property portfolio.
It was unclear on Friday why it had decided to call in advisers at this point to undertake a sale process.
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Trinity College Cambridge did not respond to two requests for comment.
Clothing stores were particularly affected, where sales fell by 3.1% over the month as October temperatures remained high, putting shoppers off winter purchases.
Retailers across the board, however, reported consumers held back on spending ahead of the budget, the ONS added.
Just a month earlier, in September, spending rose by 0.1%.
Despite the October fall, the ONS pointed out that the trend is for sales increases on a yearly and three-monthly basis and for them to be lower than before the COVID-19 pandemic.
Retail sales figures are significant as household consumption measured by the data is the largest expenditure across the UK economy.
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The data can also help track how consumers feel about their financial position and the economy more broadly.
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Business owners worried after budget
Consumer confidence could be bouncing back
Also released on Friday was news of a rise in consumer confidence in the weeks following the budget and the US election.
Market research company GfK’s long-running consumer confidence index “jumped” in November, the company said, as people intended to make Black Friday purchases.
It noted that inflation has yet to be tamed with people still feeling acute cost-of-living pressures.
It will take time for the UK’s new government to deliver on its promise of change, it added.
A quirk in the figures
Economic research firm Pantheon Macro said the dates included in the ONS’s retail sales figures could have distorted the headline figure.
The half-term break, during which spending typically increases, was excluded from the monthly statistics as the cut-off point was 26 October.
With cold weather gripping the UK this week clothing sales are likely to rise as delayed winter clothing purchases are made, Pantheon added.