‘Menace on the Red Sea’: NRF Exec Testifies to Congress

On Jan. 30, the House Transportation and Infrastructure Committee Coast Guard and Maritime Transportation Subcommittee held a hearing titled “Menace on the Red Sea: Securing Shipping Against Threats in the Red Sea.”

NRF Vice President of Supply Chain and Customs Policy Jonathan Gold testified on behalf of the retail industry regarding the ongoing impact of vessel diversions away from the Red Sea, concerns with increased rates and fees, the potential for congestion at U.S. ports and risk mitigation strategies that retailers are putting into place. A copy of his written statement for the record can be viewed here and a recording of the full hearing is available here.

“Having a safe, efficient, predictable and timely supply chain is critical to the success of any retailer,” Gold told the subcommittee. “The ability to ensure that products are available for the consumer, whether they shop in-store or online, is key to the retail supply chain. We all saw firsthand the disruption caused when supply chains were completely overwhelmed from beginning to end during the pandemic.

“Through significant efforts on behalf of the private sector and governments, supply chains were returning to normal as trade flows returned to pre-pandemic growth levels and congestion issues were resolved,” he testified. “Unfortunately, we are now faced with another significant supply chain disruption with the attacks impacting commercial shipping through the Red Sea and Suez Canal. This is on top of disruptions already impacting the flow of commerce through the Panama Canal due to restrictions from low water volumes.

“While the overall volume of U.S. trade that transits the Suez Canal is only about 12 percent,” Gold said, “the impacts of the disruptions are being felt far and wide. The biggest challenge for retailers posed by the ongoing disruptions is the additional volatility, cost, uncertainty and overall risk to the supply chain. Once again, retailers and other shippers are being forced to readjust their supply chains to ensure product delivery.

“While many are focusing on the current impacts of the disruptions, the longer the attacks and disruptions continue, the more challenges that will be created. We believe the federal government needs to start paying attention to these issues now to help avoid significant congestion in the coming months.”

Earlier this month, NRF’s latest Port Tracker report said any effect from the Red Sea attacks would most likely come at East Coast ports.

As the leading authority and voice for the retail industry, NRF has long advocated for trade policy solutions that help retailers become more competitive and grow.

“As we discussed,” Gold sai,d “the challenges stemming from the ongoing attacks in the Red Sea are significant and will get worse the longer this goes. We appreciate the attention and actions that the administration has taken with Operation Prosperity Guardian and building an international coalition. We know that more work needs to go into the effort to ensure safe passage for vessels and mariners through the Red Sea. Their safety is of the utmost importance.

“We know the future impacts that will result from ongoing disruptions. While we are addressing the immediate issues impacting transit through the Red Sea and Suez Canal, we need to make sure we are preparing for the congestion issues that will impact U.S. ports in the coming months.”

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