WASHINGTON – Experts in the commercial shipping industries outlined the ever-increasing humanitarian and economic costs of recent Iran-backed Houthi militant strikes on American ships positioned in the Red Sea during a subcommittee hearing on Tuesday.
The continuing barrage of Houthi anti-ship ballistic missile strikes has targeted container and naval vessels registered to countries linked to Israel, such as the United States and the United Kingdom, following the breakout of the Israel-Hamas War on Oct. 7.
Earlier this month, two Navy SEALs were presumed dead during a raid on a naval ship containing weapons bound for Yemen. And on the commercial side, Houthi-controlled Yemen fired ballistic missiles at three commercial ships in the Red Sea in December of last year.
“The shooting has to stop,” said Bud Darr, the executive vice president of maritime policy and government affairs at Mediterranean Shipping Company, the world’s largest container shipping company. “It has to be safe enough for us to send our sons or daughters or people who have entrusted their lives with us into that region.”
Faced with the Houthi’s lasting presence in the Red Sea and the Gulf of Aden — two vital international shipping routes — several commercial companies have rerouted their vessels around the Cape of Good Hope to avoid potential targeting.
But crews that opt to sail around the tip of South Africa add an average of 10 days to two weeks to their journey each way.
“We understand that longer vessel times impact fuel, labor, energy and insurance costs,” said Jonathan Gold, the vice president of supply chain and customs policy at the National Retail Federation, the leading trade association representing stores and chains. “One employee has told me they’ve had carriers ask for an increase of $1,500 to $3,000 per container, representing a 38% to 73% cost increase for directly affected cargo.”
Gold said the retail industry is working closely with supply chain partners to mitigate disruptions. One retailer Gold works with is shifting timely and sensitive cargo to air travel, while another company is working with an overseas vendor to encourage early shipments to avoid disruptions.
Such examples of economic pivots display how the shipping industry learned from the massive supply chain disruptions during the early months of the COVID-19 pandemic when consumers confronted shortages of everything from toilet paper to prescription drugs.
“It taught us to expect the unexpected and not to think we can predict what’s coming next,” said Darr. “We have to be as nimble as possible, and it’s forced us to maintain some additional capacity at substantial cost to be able to respond.”
If shipping market conditions were in a worse condition, Darr said the industry would be in a more difficult position. “We’re making it work, and the goods are moving.”
Yet, as shipping companies figure out how to adjust strategies and absorb costs to remain profitable and maintain the stability of the global supply chain, the threat of militant attacks on commercial and naval vessels persists in the Middle East.
Darr also praised the “heroic seafarers who are keeping commerce moving, serving the needs of the global society and just trying to do their job every day.” He said that the Biden administration’s actions off the Yemeni coast are not just a commercial decision but a humanitarian one.
“Forget the supply chain for one second. For them to be shot at — as they were three times on our fleet, one of which was an hour-long firefight — is just unacceptable,” Darr said. “We can insure a ship or cargo, but you can never properly insure the impact of a loss of a human life.”
