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FMC: Supply Chain Can Weather Red Sea Disruptions

Despite numerous challenges in “[t]he world’s critical shipping lanes,” there’s reason to be optimistic about supply chain stability, the Federal Maritime Commission said recently, according to Transport Topics.

What’s going on: “[S]hipping, port and retail leaders are optimistic the situation eventually will stabilize if the fighting in the Middle East does not accelerate. … The lessons learned from the COVID-19 pandemic will keep the supply chains open through this latest crisis, using alternative routes and assistance from the U.S. military and other nations to keep the ships moving.”

  • This was among the points made at an informal public hearing last week held by the FMC.
  • Ocean carriers move more than 90% of the United States’ international trade, and at “present, cargo is moving smoothly,” FMC Commissioner Carl Bentzel said. “There is some additional capacity at the marine terminals, and … [o]cean carriers have ship orders being delivered that can be plugged to help address the reduced shipping capacity.”

Why it’s important: Continued Houthi terrorist attacks on Red Sea–going vessels have led shippers to raise their prices between 38% and 73% for that route, according to one executive who testified at the hearing. 

  • Some shippers are even adding surcharges for goods not set to go through the Red Sea.

Better prepared: In the event the West Coast sees a surge in cargo volume this summer—which some say is the likely outcome if the situation does not abate—the two main Southern California ports (Long Beach and Los Angeles) are prepared, one CEO said.

  • “The threat to international shipping posed by the events in the Red Sea is indeed critical,” Port of Long Beach CEO Mario Cordero said at the hearing. “The current situation threatens the very network of international commerce. We and our supply chain partners are prepared for any diversion of cargo that may occur due to the situation in the Red Sea.”
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