SE North Carolina News

Water Resources and Environment Subcommittee Chairman David Rouzer (R-NC-07) recently participated in a hearing of the Coast Guard and Maritime Transportation Subcommittee to address the threats posed by Iranian-backed Houthi attacks on shipping in the Red Sea. Chairman Rouzer highlighted the significance of the Red Sea and the Suez Canal in maintaining a well-functioning global supply chain and expressed concerns about the impact of delayed shipments on the global economy.

During the hearing, Dr. Ian Ralby, Chief Executive Officer of I.R. Consilium, emphasized the gravity of the situation. He stated, "The nature of global commerce makes this situation a major threat to the world’s economic stability as well as critical supply chains and desperately needed humanitarian assistance." Dr. Ralby further highlighted the financial implications of such disruptions, citing Ernst and Young's report that the six-day blockage of the Suez Canal in March 2021 cost the shipping industry $416 million per hour. He warned that the costs resulting from Houthi attacks would be even greater and ultimately borne by consumers worldwide.

Dr. Ralby also noted that the integrated nature of supply chains means that the disruption of the 30% of global container traffic passing through the Red Sea would have a more significant impact on the economy than the 10% of oil using the same route.

Chairman Rouzer sought insights into how Congress can prepare for potential congestion issues at U.S. ports if attacks in the Red Sea and Suez Canal persist. Jonathan Gold from the National Retail Federation outlined the importance of investments in land-side infrastructure and the need for effective communication among all stakeholders involved in the shipping process. Gold stressed the necessity of ensuring the availability of necessary equipment, such as chassis and railcars, to prevent congestion.

Gold also highlighted the possibility of a shift in cargo back to West Coast ports, which could lead to congestion if not properly managed. He urged the readiness of ports, terminals, railroads, drayage providers, and warehouses to handle increased volumes.

Adding to the discussion, Mr. Charles "Budd" Darr, Executive Vice President of the Mediterranean Shipping Company, expressed hope for Congress's investments in U.S. port and land-side infrastructure, believing that they would provide additional capacity and resilience to handle future supply and demand surges caused by geopolitical and unforeseen events. Darr reassured that as long as uninterrupted access to U.S. ports is maintained, there is sufficient capacity to ensure that U.S. importers and exporters can access global markets.

In light of these concerns, Chairman Rouzer and the co-chairs of the Supply Chain Caucus penned a letter to the Biden Administration, urging continued efforts and oversight to secure the Red Sea shipping lanes and restore safe trade passage in the region.

The threats posed by Houthi attacks on shipping in the Red Sea require immediate attention and strategic planning. The global economy heavily relies on the efficient functioning of the Red Sea and the Suez Canal, making it crucial to safeguard these vital transportation routes. As Chairman Rouzer and other experts emphasized, addressing these challenges and ensuring uninterrupted trade and supply chains is of utmost importance to avoid disruptions and economic repercussions.