Higher shipping costs: Fears Red Sea attacks will soon hit Kiwis in the pocket

By Nick James of RNZ

New Zealand consumers could soon pay the price for shipping networks being disrupted by attacks in the Red Sea.

In recent weeks there have been several attacks by Iran-backed Houthi rebels on container ships travelling through the busy cargo route.

Nearly 15 percent of global seaborne trade passes through the Red Sea, which leads to the Suez Canal, linking the Indian Ocean with the Mediterranean.

New Zealand and 11 other countries have issued a joint statement calling for an immediate end to attacks on container ships in the Red Sea.

Massey University supply chain lecturer Carel Bezuidenhout said the conflict meant that passing through the Red Sea was pushing up insurance costs for shipping companies.

"Most of them are actually avoiding that and taking the longer route around the Cape of Good Hope down at the bottom end of Africa. That adds substantial distance and delays to the supply chains, so in time we may start seeing a slower and non-responsive supply chain."

Bezuidenhout said all industries could be impacted if the conflict continues, but some sectors - like the kiwifruit industry - might be hit particularly hard.

"When we start harvesting kiwifruit and we want to get those fruit to Europe as fast as possible, then it is going to become problematic for us to add another two weeks to get around the Cape of Good Hope."

He said uncertainty around when the attacks would end, made the situation worse.

"We don't know when it will be safe enough or when our insurance will allow us to actually get back into the Red Sea and actually start making commercial sense to run through that space."

Maritime Union national secretary Craig Harrison said shipping companies might charge more to cover the increased cost of moving goods.

"I wouldn't be surprised if the shipping companies want to up their freight rates."

Harrison told RNZ port companies will be keeping an eye on events in the region.

"I think the ports will be concerned if they see a drop in trade and if costs go up but I think at the moment they'll be analysing what's going to happen."

Retail NZ chief executive Carolyn Young said the attacks on ships could have flow-on effects.

"With the longer voyage that they have to take to miss the conflict that's happening there's some likely increases in costs that could be passed on to business owners and consumers."

Young said they will talk to businesses about dealing with any disruptions to the supply chain.

She said they have seen conflict have an impact on shipping in the past - such as at the start of the Ukraine war.

"A number of ships were having to divert their cargo into a different pathway due to the conflict that was happening in various areas and that did put pressure on timing of goods coming to New Zealand and the cost of goods getting here."