With Houthi rebels continuing to attack UK freighters in red sea, ALFED consulted with the DBT to provide feedback from the UK aluminium industry on how disruptions to the supply chain are affecting the sector. We sat down with CEO Tom Jones to get his thoughts.
“The rising cost to ship goods across the Red Sea is placing a new strain on the UK aluminium sector. With sea freight companies forced to either divert container routes or else face higher shipping insurance rates, these costs are then passed along to aluminium production and manufacture. We’ve even seen an uptick in hardline behaviour from some shipping companies who demand higher charges once containers are already loaded onto vessels, which damages supplier relations and adds an additional logistical challenge to importing raw materials and goods.”
“Alongside the direct financial impacts, we’re also seeing extended delivery times and in worse-case scenarios the full displacement of goods. One of the largest challenges the industry is facing is that of unknown variables – we don’t know how long this conflict will last, how far it will escalate, or if we’re likely to encounter additional disruptions elsewhere. Aluminium is an industry with extremely complex supply chains and a lot of moving parts, so these unknown factors present significant planning and strategic roadblocks.”
“The blow to finances and operations are severely dampening growth in a sector already afflicted by a shaky global economic climate and with limited support from the UK government.”
One ALFED member confirmed this sentiment, commenting: “Since Brexit, UK aluminium manufacturing has continued to move backwards and, as a result, has very little national resilience.” On the Houthi conflict, they continued: “We do not expect any support from the government. Historically, the aluminium industry has been on its own and left to manage whatever the world throws at us. Over the last 4-5 years we have learned the hard way the true meaning of resilience.”
Tom concluded with a call on the UK government to do more to protect the industry: “The future of UK aluminium is at a critical juncture, and we need government support to be able to stay relevant and competitive on the international stage. Recent conflict in the Red Sea only serves to highlight the acute lack of resilience that we as an industry have against global supply chain disruptions. ALFED calls on policymakers to take the voice of the aluminium industry more seriously in discussions of international trade, and work with member organisations like ALFED to find solutions which benefit the industry, wider supply chains, and the UK economy as a whole.”