Regulatory intelligence for US exporters

Shippers Report Constantly Fluctuating Rate Changes From Red Sea Disruptions

Exporters are reporting container costs changing from week to week due to attacks by Houthi rebels on commercial cargo ships moving through the Red Sea, said Eric Bartsch, the secretary of the USA Dry Pea & Lentil Council and the American Pulse Association. Bartsch, speaking during a Feb. 7 Federal Maritime Commission hearing on Red Sea shipping disruptions (see 2402070078), said many of pea, lentil and pulse exporters are small businesses, and 65% of their crops are exported.

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Eric Byer, CEO of the Alliance for Chemical Distribution, said he understands why carriers need to hike rates but his members are worried about shipping costs. Since October, spot rates have increased by over 300% for Asia to Europe routes, over 100% for Asia to East Coast routes, and around 100% for Asia to West Coast routes, Byer said.

“With Pacific Ocean routes, our members are seeing an increase from $1,400 to about $4,500 for the average rate of shipping containers from China to North America,” Byer said.

Byer also said he wants the FMC to more carefully make decisions about special permission requests for surcharges levied by carriers. Other industry officials have raised similar concerns (see 2402070078). “Please do not let the ocean carrier community take advantage of what's transpired in the Red Sea as an opportunity to financially benefit on the backs of small businesses that are critical to the global supply chain.”

The Red Sea situation may remain difficult for some time, according to Ian Ralby, CEO of I.R. Consilium. Houthi rebels attacking shipping do not care about the situation in Gaza and even if there were a "resolution satisfactory to everyone" involved, they would continue to attack ships heading into the Red Sea, Ralby said, adding that the rebels are using the conflict in Gaza to advance their agenda for greater land control of Yemen.