US industries urge government support as Red Sea disruption weighs on supply chains
9-2-2024
US INDUSTRIES URGE GOVERNMENT SUPPORT AS RED SEA DISRUPTION WEIGHS ON SUPPLY CHAINS
The American Apparel & Footwear Association (AAFA)
and the International Apparel Federation (IAF) have issued a joint letter with
over 100 signatories calling for greater government support in ensuring the
safety and accessibility of shipping routes.
The signatories which represent a range of industries including retail, clothing and footwear, are urging governments to join, support, or align with the mission to support safe and secure maritime commerce in the Red Sea and across the globe.
The letter explained that the consequences
of these attacks extend beyond immediate financial losses such as route changes
which are causing port congestion; equipment shortages; and soaring shipping
rates across the globe, all of which create inflationary impacts.
It added added even shipping lanes on the
other side of the world from the Red Sea are beginning to be adversely
affected.
The signatories underscored the ripple
effects in cost and capacity issues for the industries that depend upon safe
and secure maritime commerce as incalculable, particularly since global
transportation is already strained from reduced access to the drought-ridden Panama Canal.
AAFA president and CEO, Steve Lamar,
believes it is imperative that governments unite behind a zero-tolerance
approach to deter attacks on commercial vessels and seafarers in the Red Sea,
and anywhere in the world.
Lamar said: “The prosperity of millions of
people who are employed in our industries and in the global maritime industry
depends on safe and secure freedom of navigation.”
While Matthijs Crietee, secretary general of
IAF, added: “These attacks have already caused upwards of $80bn in cargo to be
diverted around the Cape of Good Hope. Travelling around the Cape of Good Hope
adds at least 2-3 weeks of travel and hundreds of thousands in additional fuel
and labour costs compared to travelling through the Suez Canal. This
alternative route becomes even more challenging during the Southern Hemisphere
winter months…cooperation among nations is essential to signal the importance of
free passage in international waters.”
The letter also highlighted a multinational
security initiative, Operation Prosperity Guardian, which has drawn the
participation of at least 23 countries to date, emphasising the pressing need
for governments to work together in defending maritime safety and security,
which is vital for so many industries and critical for the global economy.
Industries across the world including the apparel sector, are
currently plagued with delayed shipping times and increased costs as a
result of disruption in the Red Sea.
Navdeep Sodhi, a partner at the Zurich,
Switzerland-based consultancy Gherzi Textil Organisation, noted: “The immediate
impact is an increase in transportation costs, longer lead times, and higher
inventories, but the medium to long term also needs to be taken into account,
on the impact on brands’ sourcing. What’s clear is that most of the $100bn in
textile and clothing exported to Europe passes through the Red Sea route.”
By Just Style
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