Agricultural exporters are dealing with increased freight costs and trade disruptions amid ongoing conflicts in the Red Sea, industry leaders told the Federal Maritime Commission during a hearing Wednesday.
Attacks from Houthi rebels have been one factor forcing freight carriers to bypass the Red Sea and take alternate routes. These disruptions are expected to continue, said Eric Bartsch, the secretary of the USA Dry Pea & Lentil Council and the American Pulse Association.
“While the disruptions are relatively recent and the impacts are just beginning, we expect the increased costs and disruptions to trading routes will continue to impact volumes and frequency of the shipments,” Bartsch told the board.
More than 65% of pulses are exported out of the U.S., which makes members of the industry vulnerable to transportation disruptions, Bartsch said. The situation in the Red Sea has also impacted supplies of split peas and lentils for humanitarian efforts near the conflict.
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“Food aid shipments have almost come to a stop going into that region,” Bartsch said, pointing to Djibouti as one country not receiving these shipments.
FMC Chair Daniel Maffai called the Houthi attacks on the Red Sea the “biggest impingement on freedom of the seas in decades.” He said the commission recognizes that any alternatives to the Suez Canal “involve trade-offs and higher costs.”
U.S. law allows FMC to waive 30-day notice requirements for carriers that implement additional fees or surcharges due to the need to change routes, Maffai said. These fees and surcharges, however, must be “clearly defined, serve a specific purpose and have an end date.”
Peter Friedmann, the executive director of the Agriculture Transportation Coalition, urged the board to do a more thorough analysis of potential costs and savings when granting these waivers to carriers. He criticized previous waivers that he said were approved “within hours” of the requests going out.
“Was there any calculation to the cost to the carrier, the cost to the shipper, the savings to the carrier not going through the Suez, the impact, the amount of the surcharges? Certainly not. It was done within hours,” Friedmann said.
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