(LibertySociety.com) – Americans could see increased prices and delays in the shipment of certain goods from Asia via the Red Sea. Houthi rebels recently began attacking commercial ships destined for the United States, which has reportedly caused a detrimental disruption to the supply chain. The United States military has responded to the attacks, which has resulted in commercial ships taking the longer route through Africa, according to Newsweek. The Panama Canal is also used to transport goods to the United States, but low water levels impede travel at times.
According to Syracuse University professor Patrick Penfield, who teaches about supply chain practices, shipments to the United States will now take roughly 10 days longer than usual. As reported by Newsweek, he said that the additional 3,500 miles of travel will impact companies that rely on Asian-produced goods. Most significantly, he indicated companies that offer shoes, clothes, and electronics will see increased costs for deliveries, which would ultimately increase prices for consumers. Penfield predicted a three to five percent increase in shipping prices if attacks in the Red Sea persist. He said that the current supply chain issues have not amounted to the 2020-level issues, which caused record price increases.
Penfield warned that further escalation, including war, could upend any level of stability that remains regarding freight prices. Oil prices could also increase, which would result in higher gas prices for Americans. Over the last several months, gas prices have remained on the lower side, which Penfield said was due to low demand. He also said that consumers would not see the effects of the longer shipments for the next few months, but shelves would not be completely filled during the spring and summer. Companies have the option to transport some goods via air, but the cost is higher than transporting them on commercial ships. The Israel-Hamas War has not shown any signs of ending, which could mean more attacks from groups like the Houthis and Hezbollah.
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