In a new blog, the White House National Economic Council said the Federal Maritime Commission (FMC), an independent agency, was already investigating excessive shipping fees, but should consider using other tools, including challenging carrier alliances if they resulted in unreasonable costs or delays.

It also urged Congress to enact reforms to give the FMC more tools to oversee the global shipping sector, including boosting transparency about fees carriers charge their customers.

President Joe Biden and his administration are racing to address supply chain snarls that emerged in the wake of stronger-than-expected recovery from the COVID-19 pandemic, fueling product shortages and inflation.

Much of the focus has been on U.S. ports, which have been inundated with cargo as a result of seismic shift in consumer spending during the pandemic, from travel and dining to physical goods.

The pandemic also reduced the number of workers needed to keep goods flowing smoothly. Aging truckers retired early, while infection control measures have limited dock and warehouse staffing.

The White House said new data showed continued improvements, with a record number of containers imported at the ports of Los Angeles and Long Beach, California, from January to October, retail inventories up 4% from 2020, and on-the-shelf availability at 90%, just 1% below levels seen before the pandemic.

“The good news is that we’re moving more goods than ever before, we’re seeing that retail is fully stocked, and we’re seeing that the ports are moving these goods more quickly,” a senior White House official said. “That means it’s going to be a normal holiday season for Americans.”

At the same time, the White House said more work was needed to improve exports out of U.S. ports, with rising shipping costs making it more profitable for carriers to load empty containers instead of waiting for loaded containers to get to ports.

“The problem … raises questions about the fair treatment of American exporters and importers in the shipping industry,” it said, noting that nine carriers organized in three alliances now controlled 80% of global shipping, up from just 29% in 2011.

The alliances are legally immune from antitrust laws, but the FMC can challenge them if they result in unreasonable delays, unreasonable increase in transportation costs or “substantially lessen competition,” the White House said.

It said the U.S. Justice Department stood ready to help the FMC, adding that the agency needs a bigger budget than its current $30 million.

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Staff shortages and congestion

Rapid changes in consumer behavior hit retailers unprepared, and when the economy stalled in the first half of 2020, retail sales fell, and inventories rose. Ocean carriers shipped more and more ships from China to the ports of Los Angeles / Long Beach, and incoming volumes have been huge. The situation was further complicated by the fact that a significant number of truck drivers were infected with Covid-19 and had to go into isolation, slowing down the movement of the containers and leaving them overcrowded. For example, since November 2020, between 20 and 40 container vessels have been continuously anchored near the ports of the Gulf of San Pedro, waiting up to 10 days to call at the port. The lack of staff only makes the situation worse.

The influence of the “Chinese factor”

Several studies suggest that the “China factor” should also be taken into account: production activity in China began to decline in the first quarter of 2020 due to the pandemic, and there were many cancellations of container vessels due to a lack of products from closed factories. The shortage of Chinese-produced raw materials, which is critical to production processes in the US, Japan and Korea, has had a negative impact on the global supply chain as a whole.

The demand of the importers

Already in the fourth quarter of 2020, Chinese production capacity reached its highest level in five years, but there is still an insufficient number of orders. US production capacity has still not recovered from pre-pandemic levels due to difficulties in attracting labor and a lack of various imported components. U.S. retailers are trying to meet demand and rebuild inventory. Ocean carriers have begun shifting more ships to alternative US ports, such as Auckland, Seattle-Tacoma, Savannah and Charleston. They have increased shipping rates in terms of spare capacity, but this has not deterred importers who are desperate to meet demand.

Historically the highest point for rail carriers

Experts estimate that the demand for more expensive air transport could increase, as transport trends have exacerbated the problem of container congestion in ports. The increase in the volume of ports in the second half of 2020 is also reflected in the volume of railways. Railway traffic exceeded the level of 2019 and reached a historically high level. Since August 2020, some railway lines have applied surcharges, sometimes as much as 100% of the base rate.

Inability to react to sharp fluctuations

The pandemic has forced the global transport sector to cope with highly volatile trade flows. Ocean carriers shall take all practicable steps to improve the speed and efficiency of cargo traffic, including the use of the capacity of all available vessels. When demand fell by around 20% to 30% in the second quarter of 2020, carriers restricted services and a number of ships were idle. However, as cargo volumes increased, carriers were unable to adapt quickly enough.

Author: Roland Peterson, logistics expert

Image: www.pexels.com

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