The Biden administration is turning up the heat on ocean shipping companies to stop denying cargo space to U.S. agricultural goods and indicating the federal government may take action.
The USDA on Friday made public a letter from Agriculture Secretary Tom Vilsack and Transportation Secretary Pete Buttigieg to vessel-operating common carriers, or VOCCs for short, demanding that they not agree to send empty containers back to countries like China and leave U.S. ag exporters unable to get their products to foreign buyers.
Along with a vague warning about potential new action from the Federal Maritime Commission, the cabinet members issued sharp criticisms to VOCCs like China Ocean Shipping Company (COSCO), Evergreen Shipping Agency, Maersk and Hapag-Lloyd AG.
“Shippers of U.S. grown agricultural commodities and goods have seen reduced service, everchanging return dates, and unfair fees as containers have short-circuited the usual pathways and been rushed to be exported empty,” Vilsack and Buttigieg said in the letter.
Legislation to force VOCCs to allow U.S. exporters to load containers with pork, rice, dairy, wine, almonds, alfalfa and other farm goods is making its way through Congress, but the cabinet members also intimated that the Biden administration would be willing to take action.
“This imbalance is not sustainable and contributes to the logjam of empty containers clogging ports,” Vilsack and Buttigieg said in the letter. “The poor service and refusal to serve customers when the empty containers are clearly available is unacceptable and, if not resolved quickly, may require further examination and action by the Federal Maritime Commission.”
FMC Chairman Daniel Maffei, testifying at a House Transportation and Infrastructure subcommittee hearing in June, told lawmakers that the Commission did not have the authority to stop VOCCs from denying cargo space to U.S. agricultural exporters.
Traditionally in pre-pandemic commerce, a ship would arrive from China at California’s Port of Long Beach or Port of Los Angeles, unload and then take on containers full U.S. ag commodities bound for Asian importers in countries like Japan, the Philippines or Vietnam. Often ships would also move up the California coasts and stop at ports like the one in Oakland, a major outlet for U.S. rice exports. But demand for Chinese consumer electronics, footwear, toys and many other products is so strong that exporters are paying the shipping companies extra to return immediately to China.
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“The Port of Oakland, Port of Portland, and other West Coast ports have excess capacity to alleviate supply chain congestion,” the secretaries wrote. “Particularly, the suspension of service by ocean carriers at the Port of Oakland earlier this year has required agricultural exporters to truck their harvests to the already heavily congested Ports of Los Angeles and Long Beach … Restoration of service would not only ease the congestion at the Ports of Los Angeles and Long Beach in Southern California but would allow the prompt export of American goods overseas and ease the strain on the supply of long-haul truckers necessary to transport goods from Northern California to Los Angeles and Long Beach.”
Support for the Ocean Shipping Reform Act of 2021, a bill authored by Reps. John Garamendi, D-Calif., and Dusty Johnson, D-S.D., grew quickly in the House since it was introduced in June and the legislation was easily passed on Dec. 8 with a vote of 364 to 60 vote.
Port of Los Angeles Director Gene Seroka offered up his support of the bill, which would ban VOCCs “from unreasonably declining export cargo bookings if the cargo can be loaded in a safe and timely manner.”
About 75% of ships leaving the Port of Los Angeles are carrying empty containers after VOCCs refuse to load them with U.S. exports, Seroka said.
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