Spinneys Launches New UK-Europe-UAE Road Freight Corridor Amid Supply Disruptions
UAE premium grocer Spinneys has established a new road freight corridor connecting the UK and Europe to the Emirates via Turkey and Egypt, significantly cutting transit times amidst regional shipping disruptions.
Dubai-headquartered grocer Spinneys has introduced a dedicated road freight corridor, linking suppliers in the UK and Europe directly to the UAE. This strategic move is a direct response to severe disruptions in maritime shipping routes, particularly those affecting the Strait of Hormuz, which caused sea freight delays of up to 120 days and a sharp increase in container costs.
The New Supply Route
The new road corridor facilitates the transport of goods from the UK and Europe through Turkey and Egypt, before entering the UAE by land. During the first half of the year, Spinneys successfully completed 26 shipments via this route. This innovative overland journey significantly reduces transit time to approximately 17 days, a stark improvement compared to the normal 30 days for sea freight or the protracted 100-120 days experienced during the recent peak of disruptions.
Spinneys, which imports around 40 per cent of its product range, also diversified its sea cargo routes, diverting vessels through alternative regional ports such as Khor Fakkan, Fujairah, Salalah in Oman, and Jeddah. Increased use of air freight further augmented its supply chain resilience efforts.
Impact on Costs and Consumer Prices
The geopolitical tensions led to a substantial surge in shipping costs. A single container from the UK or Europe, which previously cost around $3,000, escalated to $17,000 at the height of the crisis. Similarly, costs for shipments from the Americas jumped from $4,860 to $24,600. While these prices have since eased, they remain elevated, with UK-Europe containers currently costing about $7,000.
Despite the challenges, Spinneys' first-half revenue rose by 5.1 per cent to Dh1.909 billion. However, gross margins narrowed slightly from 41.5 per cent to 41 per cent, reflecting the increased freight expenses and inflationary pressures. To mitigate the impact on consumers, Spinneys consciously held prices on 500 key-value stock-keeping units (SKUs), absorbing some of the higher costs.
Customer behaviour also shifted, with transaction volumes rising by 6.1 per cent, but the average basket size decreasing to Dh86.40, indicating a trend of more frequent, smaller purchases. Spinneys is also expanding its private label offerings across various categories to gain greater control over sourcing, manufacturing, and pricing, ensuring continued value for customers.
Questions, answered
- What is the new road freight route Spinneys is using?
- The new corridor connects the UK and Europe to the UAE by land, passing through Turkey and Egypt before goods are transported into the Emirates, bypassing traditional sea routes through disrupted regions.
- How much faster is the new road freight route compared to disrupted sea freight?
- The new road route takes approximately **17 days** for delivery, a substantial reduction from the 100 to 120 days experienced during peak sea freight disruptions, and even faster than the normal 30-day sea journey.
- How much did shipping container costs increase due to the disruptions?
- The cost of a container from the UK/Europe to the UAE surged from approximately **$3,000 to $17,000** during the peak of the disruption. Shipments from the Americas saw an even steeper rise, from $4,860 to $24,600.
- What other measures did Spinneys take to address supply chain challenges?
- In addition to the new road corridor, Spinneys diversified sourcing markets, rerouted sea cargo through alternative regional ports like Khor Fakkan, Fujairah, Salalah (Oman), and Jeddah, and increased its reliance on air freight to maintain stock levels.
- How did Spinneys manage product pricing amidst rising freight costs?
- Spinneys consciously decided to hold prices on **500 key-value stock-keeping units (SKUs)** to support consumers, absorbing some of the increased costs. They also expanded their private label range to gain more control over sourcing, manufacturing, and pricing.
This brief was summarised and rewritten by Gaia Living from public reporting. Figures and details reflect the original sources.
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