FMC warns ocean carriers to stop refusing U.S. exports

Responding to numerous complaints from U.S. agricultural exporters, including members of the Specialty Soya and Grains Alliance (SSGA), about shipping delays or canceled bookings, the U.S. Federal Maritime Commission (FMC) is ramping up pressure on global ocean container carriers to live up to their obligations under the U.S. Shipping Act.

Awareness has been growing about the negative impact of the current global container shipping imbalance. Extraordinarily high rates and high demand for Asian exports to the United States have led some carriers to send empty containers back to Asia for the lucrative head haul, rather than to inland U.S. for lower-revenue export shipments.

SSGA first drew attention to the growing problem in a news release in late October. The Agriculture Transportation Coalition (AgTC) has further put the spotlight on the issue, sending reports of delayed shipments, canceled bookings and denied new bookings – even months ahead of time – from ag shippers nationwide.

Last week, FMC commissioners Carl Bentzel and Daniel Maffei sent a letter to the World Shipping Council, which represents the leading international ocean carriers, expressing concern about reports of carriers refusing to accept export bookings.

“We recognize that operational changes to ocean carrier scheduling have been implemented (in response to the surge in imports), but the U.S. export market should not be excluded,” the letter said. “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 than should be done.”

Read more in-depth coverage of the situation in Freightwaves and Journal of Commerce.

Crunch may last until spring or beyond

Meanwhile, forecasters keep pushing the time lag for the severe current container access shortage for ag exporters out further into 2021, predicting it will last until early or mid-March.

The impact of COVID-19 has led to a huge surge in demand for consumer and home goods, largely from e-commerce providers like Amazon and big box stores like Target and Home Depot. An estimated 60% of those goods are made in China. Major West Coast ports, notably Los Angeles and Long Beach, have become clogged with containers and chassis unable to move fast enough while ships are moored off-shore unable to unload.

Analysts say the container shortage could last until after the Chinese New Year observance, and prominent global economist Paul Bingham of HIS Markit told participants in AgTC’s Major Midyear Meeting the import surge could even last all the way through 2021.

Read more coverage of the AgTC meeting in the American Journal of Transportation.

Carriers undergo expansions

Some carriers are taking steps to expand their capacity during this time of unprecedented demand. Swiss-based Mediterranean Shipping Company reportedly has purchased 16 second-hand container vessels for $260 million, and major French-owned ocean carrier CMA-CGM reportedly is increasing its capacity by 10% on its busy Asia-Europe trades. Hopefully that will eventually spell more capacity for the Trans-Pacific.

Journal of Commerce reports that the surge in demand has led ocean carriers to up their orders for new containers, nearly all of which are manufactured in China.

Compiled by Bruce Abbe, SSGA strategic adviser for trade and transportation. Email him at babbe@soyagrainsalliance.org.