The U.S. economy may be at risk due to the Red Sea disruptions, stakeholders warned regulators during a hearing last week. The House of Representatives’ Coast Guard and Maritime Transportation subcommittee held a hearing last week to evaluate the emerging challenges posed by ongoing attacks on commercial shipping along the Red Sea. Shipping experts warned of possible congestion and higher inflation if the situation prolongs.

The Red Sea vessel attacks from Houthi rebels have already caused a ripple effect for supply chains. As ocean carriers have rerouted several vessel services, transit times and ocean shipping rates have gone up significantly. In turn, some food shippers have already reported delays and constraints for certain ingredients and food-related products.

Shipping disruptions, brought on by militia attacks in the Red Sea and drought problems in the Panama Canal, are expected to negatively impact U.S. food and beverage companies in both exports and imports, according to an industry overview report from BofA Global Research released Jan. 31.

According to the report, companies sourcing from Asia that face the greatest risks from shipping disruptions include Keurig Dr Pepper for brewers from Asia, and McCormick & Co. for spices from India and Indonesia. Protein companies such as Tyson Foods, Hormel Foods, and Pilgrim’s Pride Corp., who export to Asia, may also be impacted adversely as could Latin American protein companies such as JBS, Marfrig and Minerva Foods.

Sovos Brands, which the Campbell Soup Co. is in the process of acquiring, also may see shipping delays since it imports its Rao’s Homemade sauce products from Italy through the Mediterranean Sea to the United States, according to the report.

The shipping issue in the Red Sea differs from the issue during COVID-19 in which a demand problem led to a scarcity of containers, according to BofA Global Research. While there is an adequate supply of containers now, they are moving slower. Ships and containers appear to be more detoured than canceled.

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