Poundland owner Pepco warns disruption in the Red Sea could raise freight costs
Poundland owner Pepco has warned that disruption in the Red Sea could lead to higher freight costs and hit product supply.
In a trading update, the discount retailer said most of its freight costs were contracted to the end of the third quarter but the business is “facing additional surcharges from carriers in relation to the longer shipping routes being taken”.
They added: “While there is limited impact on product availability currently, a prolonged issue in the region could also impact supply in the coming months.”
It came as the firm updated the market on its trading in the first quarter of the year with revenues up 11 per cent on last year to €1.9bn (£1.63bn).
Earlier this month, fashion retailer Next warned of “some delays to stock deliveries” as a result of the issue.
Sainsbury’s chief executive, Simon Roberts, is also said to have held “urgent” calls with the government following attacks.
Roberts, who fronts one of Britain’s most popular supermarkets, told the press shipments of wine and general merchandise were among items facing delays.
“We are working on our sequencing of orders to ensure we always have good availability in product areas which can travel through these routes, such as general merchandise and wine,” he told PA.
“Getting products from across the world is an important issue for the government, so we are on regular calls to make sure we have the latest intel and understand the potential impacts.”
Ongoing disruptions will serve as another blow to UK retailers who in recent months have faced a barrage of issues including rises in business rates and surging inflation.