NRF: Attacks on cargo ships in Red Sea causing volatility in supply chains

Disruptions caused by attacks on cargo ships in the Red Sea have once again created volatility in retail supply chains, leading to delays and increased costs.

That's according to the Global Port Tracker report by the National Retail Federation and Hackett Associates. Jonathan Gold, NRF VP for supply chain and customs policy, noted that retailers are working with their carrier partners on mitigation strategies to limit the impact of the disruptions caused by the attacks, "but we are seeing longer transit times and increased costs as a result.”

To help retailers navigate supply chain challenges, NRF 2024: Retail’s Big Show will feature a special one-day program — Supply Chain 360 Summit — on Sunday, Jan. 14, 10:00 a.m. - 3:45 p.m. (ET), at the Javits Convention Center, New York City.

Hackett Associates founder Ben Hackett said that any effect from the Red Sea attacks would most likely come at East Coast ports.  Although most cargo headed to the East Coast from Asia comes across the Pacific and through the Panama Canal, some comes through the Red Sea before crossing the Atlantic. Carriers’ decision to go around the Cape of Good Hope to avoid the attacks is adding five or six days to the month-long trip from Shanghai to Savannah via the Suez Canal. And some retailers are reporting delays of as long as two weeks.

“The number of containers arriving at East Coast ports should not be directly affected if carriers add ships to maintain capacity, but shippers will have to adjust their supply chains to cope with longer transit times,” Hackett explained. “We may see an increase of Asian cargo arriving at West Coast ports and then shipped east via intermodal rail, but doing so is costly and does not save that much time. As might be expected, carriers are passing on the additional voyage costs and then some.'

According to Matthias Menck, principal consultant at supply chain and procurement consulting firm Proxima, businesses are now looking at spending $1,000 more for West Coast shipments than they were before the situation in the Red Sea began.

“Businesses will be facing delays in receiving stock, which will have the most significant impact on those selling seasonal goods,” he said. “In the longer-term, lead times will increase for imported goods, meaning businesses will have to shift their normal decision-making time-scales to ensure they have adequate stock.”