Date: Monday, July 19th, 2021
Across Washington DC there’s ever greater scrutiny of the operations of the world’s container shipping companies, who are on track to post their greatest ever year of profits.
Ten days ago president Joe Biden issued an executive order to address competition in shipping, tapping the Federal Maritime Commission (FMC) to take all possible steps to protect American exporters from the high costs imposed by the ocean carriers and to crack down on unjust and unreasonable fees, including detention and demurrage charges.
Last month the White House also announced the creation of a Supply Chain Disruptions Task Force. Led by the secretaries of commerce, transportation and agriculture, the task force aims to bring together stakeholders “to diagnose problems and surface solutions – large and small, public or private – that could help alleviate bottlenecks and supply constraints”.
Next month Congress will be debating shipping issues too. Two members of the House Transportation and Infrastructure Committee have drafted a bipartisan bill that could see the US Shipping Act amended when it comes up for voting in August.
The new bill, created on the back of a wave of anger among US agricultural exporters, will ban carriers from declining all cargo bookings for exports. It will also require liners include a statement of compliance with Shipping Act regulations. The FMC will also be required to post publicly all findings of false certifications by ocean carriers, as well as giving the FMC greater strength to ensure US exporters are not shunned by carriers.
The difference in fronthaul and backhaul cargoes on the record-breaking transpacific is now more than $10,000 per feu, making liners keen to get boxes repositioned fast to make the most of today’s extraordinary freight rate environment.
Carriers have sought to play down American political posturing. The World Shipping Council, the Washington DC-based liner lobbying group, has argued that normalised demand, not regulation, will solve the supply chain woes that have bedevilled shippers all year.
“There is a lack of rail and truck capacity, warehouses are full, and ports are bursting at the seams,” the WSC observed in a release last week.
“This is not the fault of any given supply chain actor. Supply chains simply cannot efficiently handle this extreme demand surge, thus resulting in the delays, disruptions and capacity shortages felt across the chain. All supply chain players are working to clear the system, but the fact is that as long as the massive import demand from US businesses and consumers continues, the challenges will remain,” said John Butler, president and CEO of the WSC.
Other nations, including China, Vietnam and South Korea, have also looked into tackling high shipping costs over the past year.