Against the odds: US banana importer joins trucker's FMC action against Hapag-Lloyd
One banana, two banana, three banana, four…
UPDATED 22 NOVEMBER TO REFLECT THAT THE SOURCE WAS A WHITE HOUSE BLOG, NOT AGTRANS.
The White House has called on authorities to impose greater scrutiny on shipping alliances and the behaviour of shipping lines during the pandemic.
“Today a system of global alliances dominates global shipping, where nine carriers that have been organised into three alliances controlling about 80% of the global shipping market, and 95% on the critical east-west tradelanes,” noted a White House blog post.
“Alliances only controlled 29% of the market as recently as 2011,” it added.
“This lack of competition leaves American businesses at the mercy of just three alliances. Retailers are charged fees for their container remaining on the docks, even if there is no way to move their containers. If the alliances decide to not accept exports, agricultural exporters will not be able to fulfil their contracts, and farmers’ perishable products may be left to rot.”
However, the blog acknowledged recent improvements at the ports of Los Angeles and Long Beach and noted that 60,000 empty containers had now been moved from the two west coast ports, while the number of boxes sitting on docks for more than nine days had been cut by one-third in the first two weeks of November.
It said the congestion fee imposed on lines by the ports had helped shift “long-dwelling containers” – a move so successful that the fee has been postponed.
The reduction in boxes has allowed more space for containers to be unloaded and trucks to manoeuvre. But the blog pointed out that “thousands of empty containers remain on the docks, often sitting on chassis”.
It explained: “The ocean carriers have now agreed to clear more of these empties from the docks faster, including bringing in vessels dedicated to empty removal. Based on these new commitments, they have already cleared out 60,000, with commitments to remove another 28,000.”
But the article argued that “more work is needed” and the current system raised questions “about fair treatment”.
“The rise in cost of shipping between Asia and the west coast has meant it is more profitable for carriers to quickly load empty containers, or return without a full ship, instead of waiting for loaded containers to get into the port.
“The share of exported containers at the two ports that are empty has risen from around 55% in the five years preceding the pandemic, to over 70% so far this year.”
The article called on the FMC to use more tools to scrutinise the carriers.
It said: “For example, while the alliances between carriers receive statutory immunity from antitrust laws, the FMC can challenge those agreements if they ‘produce an unreasonable reduction in transport service or an unreasonable increase in transport cost or … substantially lessen competition’.”
It also urged Congress to give the FMC more money (its annual budget is $30m) to oversee shipping and sharpen laws on transparency, such as public reporting of detention and demurrage fees.
“Moreover, Congress should provide the FMC an updated toolbox to protect exporters, importers, and consumers from unfair practices.”
The FMC said yesterday it was establishing ‘six supply chain innovation teams’, to begin meeting on 1 December, to identify where improvements could be made to the processes.
FMC commissioner Rebecca Dye said the goals were for truckers to be able to do double moves and bring certainty to earliest return date processes.
“Achieving double moves for truckers would improve productivity and remove a constant source of conflict over container return, as well as resolve problems with appointment systems and chassis shortages,” she said.
“Earliest return date confusion is a terrible problem for US exporters. This reform would also remove the constant problem to US agricultural exporters of demurrage and detention charges that are not in compliance with our interpretative rule,” she added.
Yesterday, the ports of Los Angeles and Long Beach offered preliminary estimates of 849,000 loaded containers imported in October, bringing the number of containers imported between January and October to 8.6m, a 16% rise on the previous record set in 2018.
And the major shippers said their inventories were improving, with Walmart’s US inventory rising 11.5% in the quarter.