Unprecedented early ordering is being driven by concerns that the global shipping industry could buckle under the strain of trying to fulfil mounting Christmas orders without using the important Red Sea trading routes.
European retailers are attempting to side-step terrorist attacks to deliver Christmas cheer to consumers but, as a result, German and UK shoppers may miss out on fashion and electronic goods.
The retailers are worried that, unless they do order this early, the vitally important festive trading season could be spoiled by Christmas stock being held up through terrorist attacks in the Red Sea.
A wave of terrorist attacks on international shipping by Houthi rebels from Yemen, sympathetic to Hamas, have effectively closed Red Sea routes to commercial shipping. When combined with ongoing price volatility in the shipping sector, which has seen transportation prices rise sharply, retailers are facing a double-whammy of pressures.
To ensure they capitalise on the money-spinning Christmas trading period, companies have little option but to attempt to get goods shipped early, to avoid further price increases that could feed through to consumers.
Retailers scramble to avoid a nightmare before Christmas
Avoiding the Red Sea conflict zone, one of the world’s busiest shipping lanes that annually accounts for between 12-15% of global trade, is no easy feat.
Container ships, from the powerhouse South-East Asian manufacturing regions supplying European markets, are having to sail around South Africa’s Cape of Good Hope – adding 3,500 nautical miles (12 days) to shipping times and millions of dollars in additional costs to companies.
Supply chain advisors Drewry’s World Container Index (WCI) 2024 recorded a 270% increase in shipping container costs in the 10 months since the Hamas attack on Israel, and the start of the wider Middle East crisis.
In August 2023, a container cost $1,389 (€1,249.20); that price had rocketed, by August 2024, to $5,182 (€4,660.43).
German and UK consumers more vulnerable to price increases
Patrick Lepperhoff, from international supply chain management company INVERTO, explained to Euronews Business that, although all major importing economies in Europe are likely to feel the effects of the Red Sea disruption, Germany and the UK are particularly vulnerable.
“Countries with a high reliance on imported goods, such as Germany and the UK, will be particularly hard-hit. These economies are heavily dependent on smooth global trade flows, and the disruption could lead to increased shipping costs and delays, impacting pricing and product availability, especially in sectors like electronics, fashion, and consumer goods.
“The prolonged impact of Red Sea disruptions is having knock-on effects across supply chains. Usually, the summer is a quiet time for shipping and warehousing. However, at present, the shipping industry is remarkably busy, as the complex process of getting shops stocked for the key Christmas period is moved forward two months,” Lepperhoff said.
“This has put pressure on retailers, as they take in more stock early, which they may not have warehouse space for. Instead, retailers will need to seek short-term storage backup, which can be very costly,” he added.
Could shoppers benefit from early sales?
Lepperhoff was quick to dismiss the idea that retailers’ need for extra warehouse space to accommodate early Christmas stock could benefit consumers through early sales.**
He told Euronews Business that prices in the shops may actually increase. “Retailers are likely to rely on third-party logistics providers (3PLs) to create extra warehouse space, as well as increasing the utilisation of their existing warehouse facilities.
“However, this comes with added costs, which could lead to a 1-3% price increase.
“While sales will still run as normal, the extent to which retailers can absorb the additional costs remains uncertain, and some of this cost may be passed on to consumers through higher prices.”
