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US exporters are still very angry with the shipping lines, but credit US lawmakers for helping solve the supply chain crisis that had stymied their ability to ship their product to the world.
President and CEO of the US Dairy Export Council Krysta Harden told delegates at JOC’s TPM23 Conference in Long Beach this week she didn’t know what would have happened without the legislation.
She was referring to the 2022 Ocean Shipping Reform Act (OSRA22), which was signed into law last June and imposed tougher standards on carriers to ensure capacity was available to US exporters.
With headhaul freights from Asia to the US skyrocketing, and containers in short supply as port congestion tied up equipment for long periods on ships, lines were accused of turning around boxes as soon as they were returned by importers, rather than making them available to exporters.
Although not officially admitted by carriers, in many instances they decided to take advantage of the booming lucrative import trade to the US, rather than lose the containers in their systems for several weeks on US export bookings for a fraction of the revenue.
“It was painful and it was costly for our industry,” said Ms Harden, citing a phone call from one large dairy exporter who, with his voice breaking, had told her of his struggle to get carriers to take his product. In desperation, he had to resort to shipping cheese to customers by airfreight at a loss to honour his contracts.
Before OSRA22, shippers were seeing their bookings declined and were unable to secure equipment and chassis. This resulted in some agricultural shippers purchasing their own chassis so they were at least able to have transport available should they, at some stage, be offered space on a ship.
“We had warehouses full of milk powder waiting to be shipped,” said Ms Harden, pointing out that agricultural products are perishable and have a limited shelf life.
As part of the consultation lead-up to OSRA22, Ms Harden tried to contact the CEOs of the major transpacific carriers. She said: “Some were very available to us, but not all.”
Meanwhile, in a later panel discussion, US exporters recounted shocking tales of the extremely poor service levels they received at the peak of the Asia-US demand boom from carriers that, hitherto, they had regarded as supply chain partners.
“We’ve been through some rough quarters,” said VP for logistics at New Jersey-based Fornazor International Carl Varner. “We learned where we fit in. We learnt our place.
“Our cargo was no more than a convenient backhaul for the carriers,” he said, adding that his rates had spiked by 600%. “We opened a newspaper and read about the huge profits of the carriers while they were charging us demurrage and detention charges at every opportunity.”
Joye Runfola, logistics principal at US-based but French-owned Air Liquide, a supplier of industrial, medical and speciality gases, agreed. She said: “Carriers were making money hand over fist from D&D charges, charging us every nickel and dime for fees that were out of our control.”
However, now US exporters are seeing carriers approach them, cap in hand, for their business again.
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