U.S. agriculture is experiencing a boom in exports as China has scooped up large quantities of U.S. farm goods like corn, meat and more. But those shipments could potentially be even more, according to testimony delivered to Congress this week.
The House Transportation Coast Guard and Maritime Transportation Subcommittee held a hearing on shipping issues, including many that have affected agriculture such as supply chain constraints that started in the COVID pandemic.
A rise in consumer demand has prompted shippers to opt to snub U.S. ag exports and instead opt to ship empty containers to Asian destinations so they can be loaded up with consumer goods and sent back to the U.S. with its expanding economy.
The North American Meat Institute (NAMI) told lawmakers that the shipping issues have carried a price tag of $1.5 billion in lost revenue. That is certainly a negative. But, a bigger worry for agriculture? Long-term loss of markets. If countries are unable to get products from the U.S., they will simply turn to other buyers. Once those supply chain links are established, they are hard to break.
Container shortages are just one of the woes, but demurrage fees -- costs linked to delays when shipments sit longer and longer before being unloaded -- are also hurting U.S. ag exports.
National Pork Producers Council (NPPC) President Jen Sorenson said there are "hundreds of documented instances of ocean carriers declining or canceling export bookings, often at the last minute, when the cargo is loaded in a container, already on train to the ports."
Not only are the issues creating extra costs and delays, it is also tying up equipment at ports that is badly needed, a situation which Sorenson said backs supplies up "all the way to the farm."
The Federal Maritime Commission (FMC) is aware of the situation and has opened up an investigation into the situation and opened an investigation. And that investigation focused on the decisions by carriers to opt to send empty containers to destinations rather than carry agricultural products.
So far, the FMC has released little about what they are finding in their exam of the situation.
Lawmakers pledged to help, with Rep. John Garamendi, R-Calif., noting, "We have a problem where the shipping industry is able to discriminate against American exporters." He has come up with legislation to amend the Shipping Act to require ocean carriers to include a statement of compliance with Shipping Act regulations. The legislation would also bar ocean carriers from declining all cargo bookings for exports, require FMC to disclose findings of false certifications and encourage the commission to ensure export opportunities for U.S. exporters and promote reciprocal trade.
The FMC held a closed-door meeting in April on the fact-finding investigation, the first meeting presided over by FMC Chairman Daniel Maffei after being named to head the agency.
FMC Commissioner Rebecca Dye has been the Fact Finding Officer for the investigation since it was launched in March 2020.
"While most participants in the supply chain are doing their best to cope with the unprecedented import boom, there are reports of container ship lines and terminal operators unfairly taking advantage of the situation or denying service to exporters in a way that may violate the Shipping Act. We must get to the bottom of this situation ASAP and that's why Commissioner Dye's investigation is crucial," Maffei said. "Just yesterday, Commissioner Dye and I met with the leaders of two important House subcommittees. These issues clearly have their attention and companies providing ocean transportation services would be well served to voluntarily take steps that address these challenges."
So we will see. The advent of using containers to ship agricultural products has been expanding in recent years even as bulk shipments are how large quantities move, but this issue is one that must be watched closely as it progresses, Washington Insider believes.