In today's globalized world, the manufacturing companies or the transportation and logistics industry plays a critical role in ensuring the smooth flow of goods and services across borders. However, with this vital function comes the responsibility of safeguarding the supply chain against potential threats such as terrorist attack, theft, and cyber activity attacks.

In this complex and ever-evolving environment, the role of shipping officials has become increasingly crucial in enhancing supply chain security. These officials are not only responsible for the physical movement of goods but also for implementing action plans and strategic shielding measures to mitigate potential risks or business risks.

As such, they serve as the first line of defense in safeguarding the supply chain against various threats.

This article will delve into the concept of strategic shielding and examine how shipping officials can play a vital role in enhancing supply chain security.

We will explore the evolving threats faced by the transportation industry, the key challenges encountered by shipping officials, and the strategies they can employ to mitigate risk assessment and secure the supply chain. Through this discussion, we hope to shed light on the critical role played by shipping officials in safeguarding the global supply chain.

A Contemporary Version of "Barbary pirates"

According to Carl Bentzel, a Federal Maritime Commissioner, the critical shipping lanes of the world are currently facing a contemporary version of "Barbary pirates" due to the violence occurring in the Red Sea. However, despite this challenging situation, leaders in the shipping, port, and retail industries remain optimistic that stability will eventually be restored, provided that the conflicts in the Middle East do not escalate.

Nevertheless, the potential risks associated with this issue are significant. Drawing from the lessons learned during the COVID-19 pandemic, supply chains are expected to remain operational during this ongoing crisis by utilizing alternative routes and receiving support from the U.S. military and other nations to ensure the uninterrupted movement of ships.

These were the key takeaways from an advisory hearing held by the FMC on February 7, which aimed to address the risks posed to the international economy. During the hearing, testimonies were sought regarding the recent acts of violence perpetrated by Houthi rebels in Yemen, supported by Iran.

The primary targets of these attacks are the shipping lanes and cargo vessels owned by companies allegedly connected to Israel and the United States.

A Significant Threat

"The ongoing acts of aggression by the Houthi rebel group targeting merchant ships in the Red Sea pose a significant threat to both human life and property. These attacks, irrespective of the origin or destination of the vessels, represent a severe infringement on the principles of freedom of the seas, the significance of which has not been witnessed in decades," stated Daniel Maffei, Chairman of the Federal Maritime Commission (FMC), during his opening statement.

Maffei emphasized the critical role of ocean shipping in the United States economy, as it enables reliable, efficient, and cost-effective access to global markets for American importers and exporters. He stressed the urgency of finding alternative solutions due to the impracticality of keeping ships idle until it is safe to transit the Suez Canal again, as no economy can afford such luxury.

Trade must continue to thrive despite the challenges presented.

The Increasing Occurrence

Expressing his concerns, Maffei highlighted the increasing occurrence of unforeseen and rare events, often referred to as "Black Swan" events, which now necessitate transportation and retail leaders to devise innovative strategies for moving cargo at reasonable prices.

Bentzel, another official, drew attention to the fact that ocean carriers handle over 90% of the country's international trade. Consequently, rerouting ships away from the Red Sea and towards the Horn of Africa, while necessary for safety purposes, will significantly escalate costs and prolong delivery times.

Nonetheless, he remained optimistic, noting that there is currently smooth movement of cargo and additional capacity at marine terminals. Furthermore, various stakeholders, including equipment providers, intermodal rail, and trucking companies, are aware of potential challenges and are prepared to adapt to new shipping patterns.

Ocean Carriers Have Placed Orders

Bentzel pointed out that ocean carriers have placed orders for additional ships that can help offset the reduced shipping capacity. Moreover, there is a slight window of opportunity as the lag between cargo delivery and its presence at sea typically spans four to five weeks.

Nonetheless, Bentzel expressed his concern that shipping conditions will deteriorate by summer, with the situation worsening the longer the attacks persist.

Reflecting on the future, an official from the National Retail Federation acknowledged that although it is currently early February, retailers are already making plans for the upcoming summer and fall retail sales seasons, along with the Christmas shopping season. This indicates the urgency and importance of finding effective solutions to the challenges faced in the shipping industry.

Shippers Have Raised Prices

Jonathan Gold, the NRF's Vice President for Supply Chain and Customs Policy, provided testimony indicating that shippers have raised prices by a significant margin, ranging from 38% to 73%, in order to transport goods through the Red Sea. Furthermore, some shippers have implemented additional fees, even for items that are not intended to pass through the Red Sea.

Gold emphasized the urgency of retailers making decisions regarding back-to-school and holiday shipments. These decisions include alternative shipping routes around the Cape of Good Hope. Remarkably, there has been a noticeable shift among our members towards utilizing West Coast ports and subsequently utilizing intermodal rail to transport items to their intended destination on the East Coast.

As Gold expressed concern over the impending challenges, he stressed the importance of the federal government taking immediate action to prevent congestion in the upcoming months.

A Surge In Cargo Volume

Gold presented evidence suggesting that West Coast ports may experience a surge in cargo volume during the summer if the violent situation in the Red Sea does not subside.

Port of Long Beach CEO, Mario Cordero, who previously served as FMC Chairman, informed the agency that both Southern California ports possess the capacity to handle additional cargo. He noted a month-to-month increase in freight passing through Long Beach and the adjacent Port of Los Angeles.

Cordero acknowledged that this unforeseen event has had a significant impact on the supply chain. The threat imposed on international shipping by the events in the Red Sea is undeniably critical, as it jeopardizes the very foundation of global commerce. Cordero assured the agency and our supply chain partners that we are fully prepared to address any potential diversion of cargo resulting from the situation in the Red Sea.

Citing December as an example, Cordero highlighted that Long Beach experienced a substantial 30.4% year-over-year increase in container processing, handling 709,819 containers compared to 544,104 in the corresponding period of 2022.

According to his statement, he emphasized the significant advancements made at the port in comparison to four years ago, when the COVID-19 pandemic initially struck. He highlighted the substantial investments made in the port infrastructure through the Infrastructure Investment and Jobs Act, as well as in the railroad and trucking sector.

Cordero further revealed that his facility has already witnessed two noteworthy enhancements to its intermodal rail network, with plans underway for the development of an additional major rail yard.

In Conclusion

The role of shipping officials in enhancing supply chain security gaps against threats is crucial in maintaining the smooth flow of global trade. Their strategic shielding strategies, such as implementing level of cargo security profiles and strict security protocols and utilizing advanced technologies, play a significant role in preventing and mitigating potential risks to the supply chain.

As threats continue to evolve, it is imperative for shipping officials to remain vigilant and proactive in their approach to safeguarding the supply chain. By working together and continuously improving national security measures, we can ensure the safety and stability of international trade for years to come.

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