How Suez Canal delays are causing a headache for red meat exports to UK

While anecdotal reports from farmers and butchers across the UK have linked the price bump to lower supply and import delays, it could be months before the full impact of changed shipping routes is known.

Ships carrying red meat exports from Australia to the UK are re-routing around the Cape of Good Hope rather than travelling through the Red Sea and the Suez Canal, meaning a 42 day voyage typically takes closer to 60 days.

According to information from the International Monetary Fund, in the first two months of 2024, Suez Canal trade dropped by 50 percent from a year earlier.

Meanwhile the volume of trade transiting around the Cape of Good Hope surged by about 74pc.

Red meat analyst with the UK's Agriculture and Horticulture Development Board Isabelle Shohet said Great Britain's lamb trade had seen incredible strength lately, with AHDB's GB deadweight sheep SQQ currently sitting at 789.8p/kg for the week ending March 16.

"The most recent data shows a robust export trade, a positive domestic demand period over Christmas and Valentine's Day reducing stocks, with lower domestic supplies, driven by a markedly lower carryover compared to 2023," she said.

"We are currently in a key purchasing period for some religious events, such as Easter and Eid, which point to further domestic demand peaks in the near term.

"Prices both domestically and across the EU remain robust.

"With some large price differentials currently being seen between the UK and New Zealand and Australia, some southern hemisphere product may also be looking to capitalise on the UK's current market conditions in the short to medium term."

Ms Shohet said HM Revenue and Customs trade data available dating up to January has shown imports from the Southern Hemisphere continuing to play a prominent role in the market, with imports from New Zealand and Australia up from January 2023.

"The impact of the Suez shipping delays may not be seen through trade data for some months, given the length of time for shipping, and other international market conditions may be influencing Southern Hemisphere exports," she said.

Meat & Livestock Australia's business manager for the United Kingdom Stephen Edwards said the Suez canal and Red Sea issue is proving disruptive to Australia's red meat exports to the UK and Europe.

"The extended shipping route via Cape of Good Hope is adding 12-20 days additional shipment time, which means consignments are arriving with much less shelf life than before," he said.

"It also impacts the service level to some customers, where some have a weekly delivery schedule of chilled Australian beef and/or lamb.

"Those customers require reliable shipment and delivery schedules to meet their production commitments, and the current situation is disrupting that reliability."

Fletcher International Exports managing director Roger Fletcher said beyond the Suez Canal and the Red Sea conflict, shipping disputes and the Panama Canal drought had also caused major disruption with ships "going in circles" taking longer routes to their destinations.

"I really don't see where the Suez Canal situation is going to get solved quickly," he said.

"You've got a $200,000 container of meat and if it doesn't get there in time, what are you going to do about it?

"You can't sell it to those people, it's gone past its use by date and it's nearly impossible."

Mr Fletcher said in those cases they might have to find an alternative country willing to take it or else bring it back to Australia.

"It's a disaster," he said.

"Unfortunately it's all beyond our control."