New Zealanders face paying higher prices over Red Sea shipping threat

New Zealanders face paying higher prices over Red Sea shipping threat

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An Israeli navy missile boat patrols in the Red Sea off the coast of Israel's southern port city of Eliat on December 26, 2023. (Photo by Alberto PIZZOLI / AFP)

Shipping in the Red Sea has been attacked by Houthis launching missiles and raids.
Photo: ALBERTO PIZZOLI

Retailing representatives are warning that New Zealand businesses and customers face the prospect of paying higher prices and prolonged delays for goods as the conflict in the Middle East hits global shipping.

Local retailers are facing mounting costs as cargo ships are forced to steer new courses to avoid the Suez Canal and Red Sea which forms the main shipping route between Europe and Asia.

The Red Sea has become an extended front in the Israel-Hamas conflict with Iran-backed Houthis launching a series of attacks on commercial shipping from south Yemen.

The net effect is that shipping costs have gone up as the world economy faces its biggest challenge to global supply chains since the Covid-19 pandemic.

Retail New Zealand chief execuitive Carolyn Young says retailers have already had a tough 2023.

« New Zealand import a lot of goods, so depending on where they come from and where the initial port of call from the ships have been or depend on how that impacts, but it could be right across the board because of the nature of the New Zealand economic environment. »

But she also said it was fortunate the problem was coming after the Christmas sales and that the retailers’ association will be making inquiries in the new year, to get a clearer picture of the situation.

Cargo ships are seen at Israel's Haifa commercial shipping port in the Mediterranean Sea on December 13, 2023. In solidarity with Palestinians in Gaza, Yemen's Houthis are warning that they will target cargo vessels sailing through the Red Sea if they are heading for Israeli ports, regardless of their nationality. (Photo by Mati Milstein/NurPhoto) (Photo by Mati Milstein / NurPhoto / NurPhoto via AFP)


Photo: Mati Milstein / NurPhoto via AFP

Despite a western-led naval task force being deployed to protect shipping, nearly 20 percent of the global container-shipping fleet is avoiding the Red Sea trade route because of the threat of drone and missile attacks.

The US treasury has imposed sanctions on entities in Turkey and Yemen, which it claims funnels money to the Houthi rebels, in a bid to stifle their ability to threaten shipping.

The Houthi movement, which is officially known as Ansar Allah (Supporters of God) are largely drawn from the Houthi tribe and Zaidi Shias that emerged in Southern Yemen and have been involved in a bitter conflict with Saudi Arabia.

The Houthis say they will continue their attacks until Israel ends its siege of the Gaza Strip.

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