WASHINGTON, D.C. – Coast Guard and Maritime Transportation Subcommittee members recently held a U.S. House Transportation and Infrastructure Subcommittee hearing to examine the impacts of shipping container shortages, and increased delays and demand on the North American supply chain due to COVID-19.

“Since the beginning of the traditional peak shipping season starting last August, United States ports have been experiencing a record surge in cargo imports,” said Rep. Bob Gibbs (R-Ohio), Coast Guard and Maritime Transportation Subcommittee ranking member, at the June 15 hearing. “This surge is expected to continue at least through 2021, and some say into the second quarter of 2022.”

He said more than 30 container vessels routinely wait for space at the Ports of Los Angeles and Long Beach (Calif.), and the Port of Los Angeles had its biggest month on record in May.

“The surge is attributed to pent-up demand from the reduced cargo flow earlier in 2020; changes in consumer spending patterns, given increased staying-at-home time in 2020 and 2021; increases in pandemic-related items like personal protective equipment; and decreased port throughput because of COVID-19’s impact on port operations, including increased testing, COVID-19 infections in workers, and quarantining,” he said.

“This real-world pressure test of U.S. port capacity has led to container shortages for certain U.S. exports, particularly ag exports; pressure on intermodal rail connections; delays in receipt of merchandise for certain importers; shortages of chassis for drayage (the transport of goods over a short distance in the shipping and logistics industries); and accusations of abuses regarding detention and demurrage charges (which is a charge payable to the owner of a chartered ship in respect of failure to load or discharge the ship within the time agreed)  – which I’ll note – ocean carriers and terminal operators deny,” he added.

Prior to the container surge, he said the Federal Maritime Commission was already conducting Fact Finding #29, which identifies operational solutions to cargo delivery system challenges related to COVID-19 regarding detention and demurrage.

“I understand that Fact Finding is now also looking at container shortages in some export markets,” he said. “I look forward to (Federal Maritime Commissioner Rebecca Feemster Dye’s) update on the status of Fact Finding #29.

“In addition, the commission had issued interpretive guidance on detention and demurrage to ocean carriers and marine terminal operators, but the Hill continues to hear complaints, although I understand few complaints have been filed with the commission,” he added. “I joined the Chair and Ranking Member of the Full Committee and Subcommittee Chair Carbajal in writing the (Federal Maritime Commission) to urge vigorous enforcement of subtitle IV of title 46, popularly known as the Shipping Act, if any violations are found.”

Rep. Salud Carbajal (D-Calif.), Coast Guard and Maritime Transportation Subcommittee chair, said in every sector of international commerce, “COVID-19 is having long-lasting consequences, and is drastically disrupting global and domestic supply chains.

“The shift to work from home for many Americans resulted in a significant increase in online shopping,” he said. “A heightened demand for imported consumer goods, manufacturing parts and commodities produced in Asia, coupled with periodic labor shortages due to COVID-19 outbreaks, has fueled massive backlogs, and price increases in the shipping container market.”

He said the increased flow of goods has primarily been from China to the United States, and has resulted in significant port congestion.

“Especially on the U.S. West Coast,” he said. “South of my district at the Ports of Los Angeles and Long Beach, there are as many as 60 ships anchored off the coast, which doesn’t include even more ships that were unable to anchor offshore due to a lack of overflow space. This is a major problem.

“In addition, carriers have often chosen to ship empty containers back to Asia rather than carry U.S. exports since it is more profitable to do so,” he added.

He said container shortages have placed a heavy strain on agricultural exporters, leaving them without access to international markets, and no guarantee that their product will be delivered on time.

“These shortages also cause backups in port terminals, where containers are stacking higher than ever, making it more difficult for truckers to move containers across the country,” he said. “Longshore workers are burning both ends of the candle trying to keep pace with the deluge of imports.

“And all the while, American workers have been exposed to numerous COVID-19 outbreaks in ports, making their health and welfare all the more uncertain,” he added.

He said delays are also costly, not only in time lost, but also in the application of detention and demurrage fees for lengthy container storage times, both on ships and on docks.

“For example, container turnaround times have nearly doubled from 60 to 100 days,” he said. “Add to that peak-season surcharges, and it becomes very difficult for our exporters to compete in the global marketplace.”

Mike Steenhoek, executive director for the Soy Transportation Coalition in Ankeny, Iowa, agreed with lawmakers concerning the national and global supply chain serving all industries currently being under tremendous stress.

“The seismic shift in consumer spending over the past 12-15 months from services (i.e., restaurants, travel, entertainment, etc.) to goods has imposed historic demand on manufacturing and production, and the supply chain that accommodates them.

“Every link (i.e., ports, railroads, trucking, maritime shipping, etc.) in the supply chain is under stress,” he added. “This particularly applies to the availability of shipping containers. Currently, it costs $6,588 to ship a container from China to the U.S. West Coast.”

For a return journey (U.S. West Coast to China), he said it costs $1,107.

“When an ocean carrier – the company that owns the shipping containers – can receive significantly more revenue for an inbound vs. outbound movement, there clearly is an incentive to return containers back to the country of origin – usually China – as quickly as possible to maximize the number of turns per year of that container,” he said.

“All exporters – including those who export soybeans and other agricultural products via container – are having increased difficulty in accessing a sufficient supply of containers,” he added. “Unfortunately, this supply-demand imbalance of shipping containers is likely to persist throughout 2021.”

Gibbs said he hopes recommendations for industry practices to deal with future cargo surges will emerge from the hearing.

“The health of U.S. agricultural exports are life and death economic issues in rural districts such as Ohio’s Seventh District,” he said. “Therefore, I’d like to strengthen the system to assure sufficient capacity in the supply chain to protect U.S. ag exports in the future.”