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FMC Members Warn Ocean Carriers of Obligation to Carry U.S. Exports

boxes
File image courtesy Hapag-Lloyd

By The Maritime Executive 12-17-2020 08:45:00

Two federal maritime commissioners are raising the alarm about challenges that American exporters face in getting their cargoes onto outbound container vessels, citing "reports that ocean carriers are refusing the carriage of U.S. exports." In a letter to the World Shipping Council, Commissioners Carl W. Bentzel and Daniel B. Maffei called for "vigorous action" to protect access to service for U.S. exporters. 

"As our ports experience unprecedented cargo surges, it is imperative that we strive for a balanced trade to keep our supply chain fully effective and efficient, while maintaining vital export opportunities for the U.S. agriculture and manufacturing bases," wrote Maffei and Bentzel. "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."

Bentzel and Maffei noted the significant challenges facing ports and ocean carriers this year - including COVID-19 disruption, labor and drayage shortages, chassis and container shortages - but insisted that the U.S. export market must not be left out amidst the import rush. They pointed out that marketplace access for American exporters is a legal requirement for common carriers under the Shipping Act of 1984 (and other legislation). The Act makes it unlawful for common carriers to “unreasonably refuse to deal or negotiate,” and it stipulates that two or more common carriers may not “boycott or take any other concerted action resulting in an unreasonable refusal to deal” or “engage in conduct that unreasonably restricts the use of intermodal services."

The challenges for U.S. exporters are related to extreme demand for empty containers in the Far East. Amidst soaring demand for consumer goods, Chinese manufacturers are waiting weeks for empty boxes to stuff with goods for Western markets. As soon as they can get an empty box and fill it, they can ship their goods, paying sky-high freight rates for Asia-to-U.S. or Asia-to-Europe carriage. The SCFI spot rate for Asia to the U.S. West Coast is hovering at about $4,000 per 40-foot unit, nearly three times the rate seen this time last year. At the extreme end, the Loadstar has reported $10,000-plus rate quotes for China to the UK. At these prices, the most profitable strategy may be to return as many empty boxes to China as possible - even if it means chartering in extra ships to evacuate containers back to Asia.

The container shortage is particularly acute for agricultural exporters in the U.S. interior, who no longer have access to service with Hapag-Lloyd. The carrier has suspended ag export cargoes in its boxes, with the exception of a limited number that are loaded close to West Coast seaports. 

The export pinch is also felt in Germany, where Hapag-Lloyd has announced a one-month halt in outbound bookings for 40-foot boxes from Hamburg, citing an "extremely tight equipment situation."