Trade leaders are urging governments around the world to join in protecting the Red Sea

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A ship crosses the Suez Canal towards the Red Sea on January 10, 2024 in Ismailia, Egypt.

said Hassan | Getty Images

Trade associations representing sectors across the global economy have joined an open letter urging more governments around the world to join Red Sea maritime security efforts.

The letter, obtained exclusively by CNBC, was signed by many of the major trade groups in the US, including the American Apparel and Footwear Association and the National Retail Federation.

Currently, the US-led Operation Prosperity Guardian is the main military defense effort protecting merchant ships that have come under attack from Houthi rebels in the Red Sea. The multinational security initiative has at least 23 countries to date, but the open letter calls for more countries to take part in protecting shipping.

“As representatives of organizations whose members are responsible for safe and secure maritime shipping lanes, we urgently call on countries to join, support or align with the mission to support safe maritime trade and secure in the Red Sea,” the letter says.

The trade groups’ letter comes at a time when scrutiny of military efforts in the Red Sea is rising within countries that have taken a leading role, including the US.

Senators on the Foreign Relations Committee, as well as House representatives, have recently questioned the Biden administration’s unilateral approval of Navy action in the Red Sea that could be on behalf of foreign-flagged vessels. France is among the countries that recently resisted political pressure and made a change to prioritize the protection of domestic flagged vessels. Political concerns in the US increased last week after the death of five US servicemen serving in the region.

Despite political pressure, the flow of global trade still depends heavily on the use of foreign ships. US import and export data, in particular, show that most of the country’s trade is on foreign-flagged vessels, with less than 3% of trade carried by US vessels , according to MDS Transmodal.

The reality of the trade also aligns with the long-term policy of the United States upholding the freedom of navigation for all countries as a principle. Under international law, freedom of navigation is defined as “freedom of movement for ships, freedom to enter ports and use plants and docks, to load and unload goods and cargo and passengers to carry “

“It is imperative that countries that have not yet joined or aligned with this vital mission do so immediately,” the letter says. “Participation and broad cooperation among countries is essential to highlight the importance of free and fair treatment in international waters.”

American Apparel and Footwear Association president and CEO Steve Lamar said in a statement accompanying the letter’s release that governments must unite around a “zero-tolerance approach to prevent attacks on commercial vessels and sailors in the Red Sea, and place anywhere in the world.”

Societies belonging to Canada, Bangladesh, Brazil, Portugal, Africa, India, Taiwan, and Poland are represented on the list.

The US has been conducting Operation Prosperity Guardian as a defense initiative in the Red Sea with more than 20 countries providing support. Defense officials have told CNBC that between four and eight coalition ships are patrolling the waters at any given time.

Is the US Navy ready for the Red Sea threat?

Up to 30% of world trade passes through the Suez Canal and the current movement around the Cape of Good Hope, worth $80 billion in cargo so far, puts two or three weeks in travel time, plus “hundreds of miles” in extra fuel. and labor costs, the letter states. In addition to financial costs, port congestion, equipment shortages, and increased shipping rates are expected.

“This alternative route becomes even more challenging during the winter months of the Southern Hemisphere,” said Matthijs Crietee, secretary general of the International Textile Federation, in a statement accompanying the published letter.

According to the trade groups, shipping routes on the other side of the world from the Red Sea are “beginning to be adversely affected,” with cost and capacity issues that are “unsustainable.”

Cargo rates rose sharply amid the Houthi attacks and most major ocean carriers have moved to the Cape of Good Hope, but there are recent signs that the sudden inflation of shipping may have already peaked. Shipping CEOs note that the industry is dealing with an excess of ships caused by the Covid surge, and the sector’s economics remain challenging amid the Red Sea unrest.

The letter also mentioned the Panama Canal drought, which put pressure on shipping Asian goods to the US East Coast.

The Red Sea disputes, the letter says, are “a global problem that requires the participation and support of all countries that rely on global trade.”

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