“We have to stop the shooting to get our sons and daughters back on the trade routes,” Durr told members of the House of Representatives.
“They are [Houthis] They are merchants of chaos, and they enjoy being chaotic,” said the founder and CEO of IR Consilium, which advises on maritime law, development, security and strategy, and civilian security regulation. ) said Dr. Ian Larby.
Larbee stressed that the Red Sea crisis is not just a US issue, and recent attacks by the US military have made the country's ships more targeted.
Typically, rebels “don't care” if they hit a U.S. ship or another vessel, he said. “They are indifferent.”
But he added, “Since we started attacking targets in Yemen, we have been increasingly targeting American ships. Those (attacks) are supported by Iran.” He described the increase in British and American vessels as “problematic”.
The topic of the U.S. Navy prioritizing the safety of U.S.-flagged vessels over foreign vessels was raised with the MSC leadership by Congressman Saldo Carvajal (D-Calif.).
Four senators on the Senate Foreign Relations Committee recently sent a letter to President Biden regarding this matter.
MSC does not have any U.S.-flagged vessels in its fleet, but other foreign airlines such as Maersk and Hapag-Lloyd do.
“We are a conduit for global trade,” Dar said. He added that although MSC is a foreign national, it pays U.S. taxes and employs many Americans across its operations.
“Keep trade lanes open,” Dar said. “At the end of the day, it's about meeting the commercial needs of our customers, and what they need is what we provide.”
Based on 2023 cargo arrival data, MSC was the No. 1 ocean carrier for U.S. imports.
Maritime Alliance partner Maersk was number one in terms of exports. Maersk is also a foreign-registered ocean carrier.
Maersk recently reported that two of its American-flagged vessels, the Maersk Detroit and the Maersk Chesapeake, were attacked on January 24 while accompanied by the US Navy as they were scheduled to sail northbound on the Bab el-Mandeb River. announced. After these attacks, Maersk announced that it would no longer fly through the Red Sea.
Ship delays and supply chain inflation
Attacks on global shipping have caused a wave of ship diversions and delays in global supply chains since December.
MSC announced on December 17 that it would change its services, which normally route through the Red Sea and the Suez Canal around the Cape of Good Hope.
Avoiding the Red Sea and circumnavigating the Cape of Good Hope adds 1 to 2 weeks to your one-way voyage via the Red Sea and Suez Canal. This diversion increases the use of air cargo because the route in Europe is longer than in the United States.
Maritime advisory firm Sea Intelligence said the average delay due to late arrivals of ships was “worsening”, increasing by 0.30 days from the previous month to 5.35 days.
Companies such as Suzuki Motors, Tesla, Volvo and Michelin have announced they have been forced to halt production due to delays in the arrival of containers. Ikea, British retailer Next and Crocs have all warned of product delays. General Electronics products are also among the top items moved along the Red Sea/Suez Canal route.
Companies in the National Retail Federation expect container prices to double from $1,500 to $3,000, John Gold, the federation's vice chairman for supply chain and tariff policy, told a House subcommittee.
“This translates into a 38% to 73% increase in costs for directly affected cargo,” Gold said. “We are now seeing some costs from small businesses being passed on to consumers.”
“I don’t ship or shop.”
Approximately 28% of the world's container trade passes through the Suez Canal/Red Sea. According to Bank of America, nearly 30% of the items in these containers are furniture, household goods, and clothing. According to the study, brands with significant exposure in Europe due to the long shipping time from Asia to Europe include Phillips Van Heusen Corporation, Birkenstock, Capri Holdings Limited, Nike, Ralph Lauren, Examples include VF Corporation and Levi Strauss & Company.
Rising freight rates have been a major factor in inflation during the coronavirus pandemic, but the Red Sea crisis has renewed concerns that supply chain-driven inflation could return.
Gold said that in addition to the freight rate increases, additional surcharges will apply not only to directly affected cargoes but also to additional trade routes such as from Europe to the United States due to container availability issues. The longer the container is used, the longer the transportation and the more misaligned the container will be. Gold said some retailers are shipping goods by air to speed up delivery, which is part of the reason why air cargo volumes have recently surged.
Air cargo volumes on major apparel routes from Vietnam to Europe surged 62% in the week ending January 14, 6% higher than the 2023 peak week in October, according to data from Xeneta. The same week 12 months ago he increased by 16%.
Larbee emphasized that the Red Sea crisis is not just a US issue.
“It represents the American economy, but this is the global economy,” he said. “I can’t ship or shop,” he said.
He cited that around 30% of the world's container shipping passes through the Red Sea, compared to 10% of oil supplies, and said that Houthi attacks would have more impact on prices in the consumer economy as a whole than on the energy market. He warned that it would have a far greater impact.
“Oil is fungible. It can be replicated from different shipments from around the world. These purchases (in containers) cannot be offset,” Larbee said.
