Members of Congress are getting involved in a dispute between US agriculture exporters and container carriers over an alleged denial of service during the second half of last year, when a sudden and sustained surge in volumes sent spot trans-Pacific freight rates through the roof.
US exporters, particularly those moving agricultural products, claim carriers have been systematically refusing bookings since last fall in an attempt to speed the return of empty containers to Asia, where they can be filled with higher-paying import cargo. That deprioritization of export shipments, along with widespread port congestion, vessel delays, equipment shortages, and other logistical breakdowns caused by near-record US import volumes, is resulting in significantly higher costs for exporters and even lost business overseas.
The US Federal Maritime Commission (FMC) in November expanded the scope of a fact-finding investigation into carrier behavior launched back in March 2020 to include, among other things, “practices related to the carriage of US exports.”
Senators John Thune, R-South Dakota, and Amy Klobuchar, D-Minnesota, on Tuesday sent a letter to FMC Chairman Michael Khouri in support of the investigation. If the allegations prove accurate, “such practices would be unreasonable, anticompetitive, and hurt millions of producers across the nation,” the senators wrote.
“The need is urgent, especially with record container volumes at the nation’s major ports,” Thune and Klobuchar added. “These volumes, and the resulting congestion, will only grow as the global economy recovers from the coronavirus pandemic. Producers rely on competitive access to foreign markets, and the reported actions by certain [carriers] to undermine this access pose significant ramifications for agricultural exporters and the industry at large.”
In a Dec. 8 speech at the Global Maritime Conference, Khouri referred to the actions by carriers as an “abandonment” of the US agricultural export industry that is “shutting them out of global markets,” adding that the commission would specifically be looking into whether such behavior violates the Shipping Act of 1984.
Thune and Klobuchar, both of whom are members of the Senate Commerce and Agriculture committees, were joined by 22 fellow senators — 15 Republicans and seven Democrats — in sending the letter, which followed a similar message last week from members of the agricultural export community to President Joseph Biden.
In a Feb. 24 letter, 71 associations including the Agriculture Transportation Coalition (AgTC) and the Specialty Soya and Grains Alliance (SSGA) claimed carriers’ denial of export cargo is “severely injuring US agriculture, food and forestry product exporters, preventing us from delivering affordably and dependably to international markets.”
“This is a crisis: Unless the Shipping Act and other tools available to our government are applied promptly, agriculture industries will continue to suffer great financial losses; these carrier practices will render US agriculture noncompetitive for years to come,” the letter added. “While the FMC is undertaking further efforts to gain compliance, the damage being done to our agriculture and forest products industries is severe, increasing, and with lost foreign markets, may be irreversible.”
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