Freight rates have jumped sharply for grocers across key shipping corridors including the Red Sea, Panama Canal, Black Sea and Europe’s Rhine as war and drought disrupt global trade.

The latest disruption threatens to push up sourcing costs for retailers and could ultimately feed through into higher prices for consumers.

Container shipping has been particularly affected, with average spot rates from the Far East to the US East Coast climbing 234 per cent year on year to £7,600 for a 40ft container.

Xeneta chief analyst Peter Sand told the FT that the disruption caused by conflict in the Middle East was becoming a more structural problem for global supply chains, with businesses and consumers likely to absorb some of the additional freight costs.

The Strait of Hormuz, through which around a fifth of global oil and gas previously passed, has been heavily disrupted by the ongoing conflict, forcing vessels to find alternative routes and energy supplies.

Attacks in the Red Sea have added further pressure. War-risk insurance costs on vessels travelling through the region have risen sharply, while some ships have taken substantially longer routes to avoid high-risk waterways.

Although Maersk and Hapag-Lloyd have begun returning some services to the Suez Canal, shipping through the route remains limited.

Maersk last week upgraded its full-year earnings guidance for the second time this year as stronger demand and higher freight rates boosted profits.

Drought adds to retailers’ supply chain headaches

Extreme weather is compounding the disruption.

Falling water levels at the Panama Canal have sent the cost of securing passage through its locks to record levels, while drought across Europe has pushed freight rates on the Rhine to their highest point since 2012.

The latest surge piles further pressure on retailers already working to protect their supply chains ahead of the crucial peak trading period.

UK businesses have increasingly brought forward orders and looked at alternative sourcing locations in recent years as instability around the Red Sea and other major shipping routes has lengthened lead times and driven up transport costs.

The disruption could prove particularly painful for retailers selling lower-margin goods, where rising freight bills are more difficult to absorb without passing at least some of the additional cost on to shoppers.

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