Regulatory fix on ocean carriers may bring unintended consequences
Federal Maritime Commission signs MOU with Department of Justice as the supply demand imbalance likely to continue.
Jacqui Fatka, National Hog Farmer
Jul 20, 2021
In maritime shipping, the global marketplace has rapidly consolidated. In 2000, the largest 10 shipping companies controlled 12% of the market. Today, it is more than 80%, leaving domestic manufacturers who need to export goods at these large foreign companies’ mercy. In a recent executive order signed by the President, the administration specifically encourages the Federal Maritime Commission to ensure vigorous enforcement against shippers charging American exporters exorbitant charges.
“This has let powerful container shippers charge exporters exorbitant fees for time their freight was sitting waiting to be loaded or unloaded. These fees, called ‘detention and demurrage charges,’ can add up to hundreds of thousands of dollars,” the White House fact sheet explains.
The whole issue of lack of container access is a real dilemma and some ag sectors are impacted greater than others. The pork industry for example gets a premium for exporting fresh versus frozen cuts. But when the supply chain isn’t operating as efficiently, they’re going to suffer as a result, says Mike Steenhoek, executive director of the Soybean Transportation Coalition.
The cost to move a container from China to the U.S. West Coast has a spot rate of $6,288, while the cost to move containers full of goods from the West Coast back to China is $986, he explains. With those rates at six times the value of bringing in the product from China to the U.S. versus taking from the West Coast to China, it’s no wonder those Chinese shippers are trying to turn those boats back around as quick as they can...
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