Regulators warn container lines to stop refusing US exports

Date: Thursday, December 17, 2020
Source: Freight Waves

Growing allegations of ocean carriers abandoning U.S. exporters by not providing empty containers for shipments to Asia have led to heightened scrutiny for potential Shipping Act violations.

In a joint letter sent on Wednesday to the World Shipping Council (WSC) from the Federal Maritime Commission (FMC), FMC commissioners Carl Bentzel and Daniel Maffei said that because of the current surge in containerized imports at U.S. ports, it is “imperative” that there be balance between carriers’ import and export services.

“We recognize that operational changes to ocean carrier scheduling have been implemented, but the U.S. export market should not be excluded,” Bentzel and Maffei wrote to WSC President and CEO John Butler.

“We want to stress the point that in responding to import cargo challenges, ocean carriers should not lose sight of their common carriage obligations to provide service to U.S. exporters. We appreciate the efforts some carriers have made, but there is more that should be done.”

Bentzel told FreightWaves separately that the letter is meant as a “shot across the bow” of the container lines because the number of complaints he is receiving are now up to four to five per day.

He said the urgency to get empty containers shipped back to China for reloading due to high U.S. import demand has led to allegations of either unreasonable rates charged to U.S. export shippers by the ocean carriers for the empties or abandoning service to shippers altogether.

“It’s a sliding scale — complaints about rates are more difficult to assess, and more analysis is needed to confirm if rates are unreasonable,” Bentzel said. “But refusing to provide service when you have the equipment but want to get the box quickly back to the port is a clear violation. These allegations require that we start to assess the situation more vigorously, and our Bureau of Enforcement has already started that process.”

Asked to comment, Butler told FreightWaves that he is “reviewing the letter, and we will respond in due course.”

In a statement issued last Thursday, WSC noted that because containers are largely owned and/or operated by ocean carriers, “there is a natural tendency to look to the ocean carriers to solve imbalance-related problems,” stated the group, which represents approximately 90% of the global liner vessel capacity.

“The solution suggested by some is for the ocean carrier to provide more assets — ships and containers — to handle the cargo surges. That would be the simplest approach if indeed it were possible, but it isn’t, at least not in the near term.”

But pressure is increasing on ocean carriers to resolve allegations of unreasonable practices and charges that have been under investigation by the FMC for much of the year. The latest ramp-up by regulators was in November, when the FMC announced the agency was expanding a fact-finding mission into demurrage and detention charges to investigate ocean carriers operating in alliances calling at the ports of Long Beach, Los Angeles, or New York and New Jersey.

“The potentially unreasonable practices of carriers and marine terminals regarding container return, export containers, and demurrage and detention charges in the ports of Los Angeles, Long Beach and New York/New Jersey present a serious risk to the ability of the United States to handle trade growth,” said FMC Commissioner Rebecca Dye.

November exports out of the Port of Los Angeles totaled more than 130,000 twenty-foot equivalent units (TEUs), “a disappointing 5.5% decrease compared to last November,” revealed Port of Los Angeles Executive Director Gene Seroka on Tuesday.

“Empty containers exceeded 294,000 TEUs for the month, a 34% increase compared to last year,” he continued. “Empties are still in high demand in Asia, and once again empty containers outstripped by two times the amount of loaded American exports that departed the Port of Los Angeles.”

 

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