Scene from a Houthi militia video of a cargo ship hijacking
War, drought causing worldwide shipping delays
By Alan Wolf, YSN
Just when you thought the supply chain was returning to normal, trouble has resurfaced on the high seas.
The conflict in the Middle East and a drought in Panama are impacting shipments of imported goods from Asia, observers report, with furniture, among other categories, feeling the pinch.
Specifically, attacks on commercial vessels in the Red Sea by Iranian-backed Houthi rebels from Yemen have prompted carriers to reroute cargo ships away from the Suez Canal and around the Cape of Good Hope. Retailers say the longer voyages are resulting in shipment delays of as much as two weeks and cost increases as steep as $3,000 per container, according to testimony by the National Retail Federation (NRF).
“While the overall volume of U.S. trade that transits the Suez Canal is only about 12%, the impacts of the disruptions are being felt far and wide,” NRF supply chain VP Jonathan Gold told a House subcommittee last week. “Having a safe, efficient, predictable and timely supply chain is critical to the success of any retailer.”
Related: The Higgins Report, Jan. 17
Compounding the problem, reports Home News Now, is an extended drought in Central America that has lowered the water level in the Panama Canal and reduced the number of daily vessel crossings by half.
NRF consultant Ben Hackett of Hackett Associates said the effects from the Red Sea attacks will largely be felt at East Coast ports, although Gold warned that attempts to reroute Asian shipments to California, and then transport goods east via rail to avoid the canal, could result in congestion at West Coast docks.
“We appreciate the attention and actions that the Administration has taken … to ensure safe passage for vessels and mariners through the Red Sea,” he said. However, “We need to make sure we are preparing for the congestion issues that will impact U.S. ports in the coming months.”