Shipping costs are more than 300% up as Suez crisis deepens

Published

2 years ago

January 12, 2024

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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.

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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.

Insurance bills are up as a result while journeys can take more than 10 days extra.

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.”

Business

Pizza Hut to shut 68 restaurants in UK after company behind venues falls into administration

Published

3 hours ago

October 20, 2025

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Pizza Hut is to close 68 restaurants and 11 delivery sites with the loss of more than 1,200 jobs after the company behind its UK venues fell into administration.

The company has said 1,210 workers are being made redundant as part of the closures.

DC London Pie, the firm running Pizza Hut’s restaurants in the UK, appointed administrators from corporate finance firm FTI on Monday.

It comes less than a year after the business bought the chain’s restaurants from insolvency.

On Monday, American hospitality giant Yum! Brands, which owns the global Pizza Hut business, said it had bought the UK restaurant operation in a pre-pack administration deal – a rescue deal that will save 64 sites and secure the future of 1,276 workers.

A spokesperson for Pizza Hut UK confirmed the Yum! deal and said as a result it was “pleased to secure the continuation of 64 sites to safeguard our guest experience and protect the associated jobs.

“Approximately 2,259 team members will transfer to the new Yum! equity business under UK TUPE legislation, including above-restaurant leaders and support teams.”

Nicolas Burquier, Managing Director of Pizza Hut Europe and Canada, called Monday’s agreement a “targeted acquisition” which, he said, “aims to safeguard our guest experience and protect jobs where possible.

“Our immediate priority is operational continuity at the acquired locations and supporting colleagues through the transition.”

The administration came after HMRC filed a winding up petition on Friday against DC London Pie.

DC London Pie was the company formed after Directional Capital, which operated franchises in Sweden and Denmark, snapped up 139 UK restaurants from the previous UK franchisee Heart with Smart Limited in January of this year.

Business

Bank of England job fears as Andrew Bailey warns of tough choices

Published

8 hours ago

October 20, 2025

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Bank of England job fears as Andrew Bailey warns of tough choices

Staff at the Bank of England are on alert for potential job cuts in Threadneedle Street after the governor, Andrew Bailey, warned of tough decisions about the institution’s future cost base.

Sky News has learnt that Mr Bailey informed Bank of England employees in a memo last week that it was taking a detailed look at costs, although it did not specifically refer to the prospect of redundancies.

One source said the memo had been sent while Mr Bailey was attending the International Monetary Fund (IMF) meeting in Washington.

Its precise wording was unclear on Monday, but one source said it had warned of “tough choices” that would need to be made as the bank accelerated its investment in new technology.

They added that managers had been briefed to expect to have to make savings of between 6% and 8% of their operating budgets.

The Bank of England employed 5,810 people at the end of February, of whom just over 5,000 were full-time, according to its annual report.

Those numbers were marginally higher than in the previous year.

The central bank’s budget, funded through a levy, is expected to be £596m in the current financial year.

The workforce figures include the Prudential Regulation Authority, Britain’s main banking regulator, which is set to get a new boss next year when Sam Woods steps down after two terms in the role.

A Bank of England spokesperson declined to comment on the contents of Mr Bailey’s memo.

They also declined to provide details of the timing of any previous rounds of redundancies at the bank.

Business

Pizza Hut to shut 68 restaurants in UK after company behind venues falls into administration

Published

10 hours ago

October 20, 2025

admin

Pizza Hut is to close 68 restaurants and 11 delivery sites with the loss of more than 1,200 jobs after the company behind its UK venues fell into administration.

The company has said 1,210 workers are being made redundant as part of the closures.

DC London Pie, the firm running Pizza Hut’s restaurants in the UK, appointed administrators from corporate finance firm FTI on Monday.

It comes less than a year after the business bought the chain’s restaurants from insolvency.

“Approximately 2,259 team members will transfer to the new Yum! equity business under UK TUPE legislation, including above-restaurant leaders and support teams.”

“Our immediate priority is operational continuity at the acquired locations and supporting colleagues through the transition.”

The administration comes around six weeks after a subsidiary of Yum! filed a winding up petition against DC London Pie.

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