Competitive Shipping: Coverage of exporter challenges, FMC action

Compiled by Bruce Abbe, SSGA Adviser for Trade and Transportation

Here are additional industry news reports and links from the past week to provide deeper background on the current crisis in the global container shipping system and the Federal Maritime Commission’s decision to investigate carrier practices at U.S. ports, particularly at the ports of Los Angeles, Long Beach, New York and New Jersey, port complexes where the import surge and congestion has been the worst.

American Shipper/Freightwaves columnist Lori Ann LaCrocco offered insights and commentary Nov. 16 on how U.S. agriculture exporters and trucking industry were urging the FMC to regulate ocean carriers. On Nov. 20, LaRocco reported on the FMC’s decision to investigate for CNBC,  noting that the FMC could assess civil penalties on foreign shippers.

Ag imports stymied

The Journal of Commerce reported on Nov. 19, the day before the FMC action was announced, how container shortages and vessel delays were stymieing U.S. agricultural exporters.

The JOC report highlighted how the clog at Los Angeles and Long Beach impacts the rest of the system: “The biggest problem is that the ships are late leaving Southern California” due to labor shortages and congestion, one terminal operator president noted, leaving the vessels often a week late getting up to Oakland for their next stop to off load and load containers.

Ron Brown, Port of Oakland Marketing and Commodities representative, explained to JOC: “With the recent surge of import cargo along the West Coast to make up for earlier blank sailings, our agriculture exporters are seeing changes in sailing schedules, and in some cases canceled books as carriers are repositioning containers to Asia.” Brown urged carriers to consider the impacts of their decisions to forego export loads to return empties to Asia on “an important sector of the U.S. economy.”

Call for D&D penalty suspension

The Agriculture Transportation Coalition, the southern California-based Harbor Trucking Association and the Pacific Coast Council of Freight Forwarders and Customs Brokers organization jointly called on the FMC to suspend detention and demurrage penalties at the ports of Long Beach, Los Angeles and New York-New Jersey until the current congestion crisis at the ports dissipates.

Containers are ‘new gold’

Shipping containers, now in short supply like never before, have become the “new gold amid a black swan box squeeze” according to Freightwaves.

Ocean carriers doing just fine, thank you

Meanwhile, earnings reports from the global ocean carriers have been coming out, and with rate increases for east-bound Trans Pacific and Asia-Europe shipments of imported boxes from Asian manufacturers hitting record levels, the ocean carriers have been doing just fine.

Carrier earnings have been forecast by one leading shipping consultancy to be the best in a decade.

French carrier CMA CMG reported this week its profits were up more than 500% in the third quarter – and the fourth quarter reportedly “looks even better”.

Israel ocean carrier ZIM reportedly crushed its all-time earnings record, with record net profit of $144 million in the third quarter, up 2,818% from the $5 million in profits earned in third quarter 2019.