Shipping Costs Soar as Ocean Carriers Avoid Conflict – Retailers Urge Government Action
The recent increase in shipping costs due to ocean carriers diverting away from the conflict in the Middle East may have long-term effects on rates if the federal government does not intervene promptly, as warned by retailers.
During a hearing on Capitol Hill, Jonathan Gold, vice president of supply chain and customs policy at the National Retail Federation, emphasized the need for government attention to prevent potential congestion at U.S. ports in the future. He expressed concerns about the impact of ongoing disruptions in the Middle East on upcoming annual contract negotiations with ocean carriers.
Gold highlighted the importance of addressing these issues now to avoid significant congestion in the coming months, emphasizing the potential for inflationary impacts on rates. He also mentioned that retailers are already making decisions regarding import shipments for back-to-school and holiday seasons, aiming to shift containers back to West Coast ports to avoid previous congestion issues.
With the possibility of increased congestion within the next few weeks, Gold stressed the necessity of collaboration among stakeholders to prepare for the influx of cargo. He referenced the challenges faced by the West Coast during the pandemic and noted efforts by the Biden administration, such as the Freight Logistics Optimization Works (FLOW) initiative, to optimize goods movement.
Bud Darr, executive vice president of maritime policy and government affairs at Mediterranean Shipping Co., highlighted the uneven impact of shipping diversions on containerized goods and the importance of long-term shipping strategies amidst the current geopolitical crisis. He acknowledged the potential for increased costs in adapting to new shipping routes and hubs.
While confident in the industry’s ability to adjust, Darr emphasized that changes in shipping strategies may lead to higher expenses, emphasizing the need for flexibility and preparedness in navigating the evolving situation.
