The Alliance for Chemical Distribution (ACD), formerly National Association of Chemical Distributors (NACD), President and CEO Eric R. Byer testified on behalf of ACD and its members as part of an informal public hearing held by the Federal Maritime Commission (FMC) on the impact of current conditions in the Red Sea and Gulf of Aden regions.

In his testimony, Byer recognized the effect of disruptions in the region, but warned that increased rate surcharges placed on shipments outside of the region could unnecessarily impact shippers globally.

“We understand that the interwoven nature of global shipping means these disruptions will have an impact on the entire ocean shipping landscape, not just the rerouted ships. Still, we fear that the current shifts in the marketplace that are occurring go beyond what is necessary and are putting a disproportionate cost burden on shippers.”

Byer also highlighted the delays and additional challenges experienced by the chemical industry, including ACD members, and cautioned against another shipping crisis.

“Currently, ACD members are experiencing delays of over 10 days for shipments being rerouted around the Cape of Good Hope. ACD members also are experiencing cancellations of port calls which are adding three to four weeks of delays. Emergency Freight Surcharges, Peak Season Surcharges, and Panama Canal Surcharges have escalated significantly since the start of the year including surcharges on all shipments out of China and Taiwan regardless of destination. These invoices do not explain what these charges are for, or how they were determined.”

“These conditions are all too familiar to what we saw in the early stages of the COVID-19 pandemic. Sadly, the rate of cost increases today are outpacing what we saw four years ago.”

Byer concluded by calling on the FMC to address some of these unreasonable surcharges.

“[W]e strongly encourage the FMC to be vigilant in overseeing special permission requests and surcharges levied by ocean carriers. The commission has the authority to address unreasonable surcharges…Finally, in Washington there is an old adage of never letting a crisis go to waste. Please do not let the ocean carrier community take advantage of what has transpired in the Red Sea as an opportunity to financially benefit off the backs of small businesses that are critical to the global supply chain.”

To read ACD’s full comments submitted to the FMC ahead of the hearing, click here.