Red Sea attacks may hinder Black Friday discounts this year

According to freight forwarding experts, attacks on ships in the Red Sea might restrict the extent of this year's Black Friday price reductions.

Global logistics operator Advanced Supply Chain (ASC) attributes this potential constraint to rising shipping container costs and retailers increasingly opting for combined sea and air transportation methods. These factors are said to be exerting significant pressure on retail margins.

Manraj Ahdan, ASC's global freight director, manages freight movement across the Middle East, delivering hundreds of millions of products for UK-based retailers. He comments, "During the past six months, we've seen the price of shipping containers from China to Europe jump from USD $900 to around USD $10,000. Alongside this, we've also seen a growing number of retailers switching parts of their sea transportation to air freight."

"A combination of sea and air transportation can help retailers claw back valuable time lost to supply chain bottlenecks caused by Red Sea attacks. For example, a sea-air route could cut delivery times from 45 days to 21 days. This is helping retailers get stock to the UK in time for Black Friday and Cyber Monday and creates an extra three weeks to put products on sale."

"Switching to sea-air transportation is a more cost-effective freight option than air-only, but can still cost retailers, conservatively, around 40% - 50% more than a shipping route. These added costs and volatility in shipping container prices will make it increasingly difficult for retailers to slash prices. Instead of seeing Black Friday deals with 50%+ off typical retail prices, it's more likely we'll see a discount of around 20% - 30% this year on new stock."

"The good news for shoppers is that stock will be available and there will be deals on offer, both around Black Friday and Cyber Monday, and in the run-up to Christmas. We've been working with retailers since May and June on peak orders, which is about two months earlier than usual, to make sure goods are moving into the UK in plenty of time."

There is also an observation that earlier peak ordering might positively influence shipping container prices. Ahdan notes, "A lot of stock inventory for this year's peak has already arrived in the UK or is due by the end of September. This could cause demand for shipping and air freight to stabilise and lead to a drop in shipping container costs by the start of quarter four this year."

As the retail sector navigates the challenges posed by increased shipping costs and the impact of geopolitical events in the Red Sea, businesses adapt their logistics strategies to mitigate disruptions. The shift towards combined sea and air transportation not only helps in expediting deliveries but also reflects the evolving nature of supply chain management.

While the anticipated discounts for this year's Black Friday may be less aggressive than in previous years, retailers are still poised to offer meaningful deals and ensure product availability during the holiday shopping season. The proactive measures taken by retailers to adjust their ordering timelines may also contribute to stabilising shipping container prices as the year progresses.