WASHINGTON — The potential impact of disruptions in the Red Sea on the U.S. economy was the focus of a congressional hearing this week, with stakeholders expressing concerns to regulators.
The House of Representatives’ Coast Guard and Maritime Transportation subcommittee convened on Tuesday to discuss the challenges arising from attacks on commercial shipping in the Red Sea. Experts in shipping highlighted the risks of increased congestion and inflation if these disruptions continue.
Attacks by Houthi rebels on vessels in the Red Sea have led to significant supply chain disruptions. The redirection of shipping services has resulted in higher transit times and increased ocean shipping costs. Companies, including Ikea, have reported delays and limitations on certain products as a consequence.
“The global economy has previously experienced the severe impacts of a supply chain crisis, and it is crucial to prevent a recurrence,” stated Rep. Daniel Webster, a Republican from Florida and the committee’s chairman, in his opening remarks.
Concerns about Port Congestion Resurface The current situation has prompted shippers to reroute cargo through the West Coast, cargo that was previously lost to port labor negotiations.
Jonathan Gold, the National Retail Federation’s Vice President of supply chain and customs policy, informed regulators that members have begun importing goods via West Coast ports, subsequently using rail to transport these goods to the East Coast as originally planned. However, Gold noted an uptick in rail dwell times and mentioned potential challenges such as rail car imbalances and heightened demand, which could lead to further congestion.
Gold also emphasized the importance of chassis availability, identifying it as a key factor in the congestion experienced during the pandemic. He urged regulators to address this and other underlying causes of port inefficiencies.
Bud Darr, MSC’s Executive Vice President of maritime policy and government affairs, offered a note of caution, suggesting that the issues arising from the Red Sea disruptions might manifest differently compared to the congestion seen during the pandemic. He highlighted the importance of considering the entire supply chain system, including the interaction with ports and the necessary onshore logistics to maintain movement.
The concerns stem primarily from alterations in maritime schedules and service rotations, differentiating the current situation from the congestion caused by overwhelmed U.S. land-based logistics during the pandemic.
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