As Iran-backed attacks rage on in the Red Sea, U.S.-based retailers are raising economic red flags in anticipation of industry disruptions and looming “uncertainty.”
“It’s a big issue,” National Retail Federation CEO Matt Shay said on “Cavuto: Coast to Coast,” Monday. “We’re helped somewhat by the fact that this is a relatively slower time of year, but what goes on here is not just the increased cost, the increased delay, but it’s really the uncertainty here as we look ahead to the future.”
Significantly delayed shipping times and pricing spikes could bleed into back-to-school and holiday shopping later this year as Iran-backed Houthi militants continue launching attacks in the Red Sea and Gulf of Aden.
The Houthis, stationed in Yemen, have for months been firing upon commercial vessels passing through the Red Sea. The militants say the attacks are in support of Palestinians killed in the ongoing Israel-Hamas war in Gaza. Last Thursday represented the 42nd, 43rd, and 44th such attacks since Nov. 19.
GLOBAL SHIPPING RATES SKYROCKET AS RED SEA CRISIS DEEPENS
Retailers are reportedly entering the renewal season for shipping contracts, and the conflict has now made it difficult “to negotiate in an environment of uncertainty,” according to Shay.
“We don’t need this kind of disruption and uncertainty,” the CEO argued. “We need to find a solution as quickly as possible.”
Shay claimed a “broader coalition” of countries may need to band together to mitigate timing delays and price increases – and that apparently includes China.
“The Chinese need to be part of this. They need to be talking to the people in the region, in Saudi Arabia and Iran and the rest of the Middle East saying, ‘We need to fix this problem,’ because they’re impacted as well,” he explained. “It’s a global challenge and it’s going to have implications here.”
A recent report from Reuters indicated that Chinese officials allegedly are pressuring Iran to rein in attacks by Houthi rebels on commercial ships, or risk harming their business relations with Beijing.
Discussions about the ongoing attacks by the Yemeni group and trade have come up repeatedly during recent meetings in the two countries, four Iranian sources told Reuters. The news agency reports that China has been Iran’s biggest trade partner for the last decade and, according to data from trade analytics firm Kpler, it bought over 90% of the Islamic Republic’s crude oil exports last year.
Outside of the Red Sea, there reportedly remain present “challenges” within the Suez Canal, in and around Ukraine, and with the Panama Canal’s low water levels.
“Our members are doing everything they can to work with their shippers to reroute goods, to plan ahead, to send things to the West Coast that would have gone to the East Coast, to move them across the country by rail and intermodal,” Shay said. “But as we get further into the season, we do need a solution.”
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FOX News’ Bradford Betz and FOX Business’ Greg Norman contributed to this report.
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