The US Maritime Commission, the US agency that regulates ocean commerce, on Friday announced an investigation into the trade practices of foreign-owned shipping carriers amid complaints from US exporters and truck drivers who often suffer losses at ports.
According to the Commissioner of Investigation, Rebecca Dye, the marine carriers operating in the coalition and the ports of Long Beach, Los Angeles, New York and New Jersey are leading the investigation.
The American agricultural industry in particular has long complained to Capitol Hill that foreign carriers are rejecting their exports in favor of repatriating empty containers to be filled with Chinese goods. The trend developed after Chinese transport officials reportedly met with major carriers and sought to curb rates as well as restore some of the canceled jails.
The first carrier to deny exports was Germany-based Hapag-Lloyd in October. Other carriers that have recently been involved in this decision are Evergreen, headquartered in China and ZIM based in Israel. CNBC has reached out for comment.
The reason for the carrier behind its refusal of US agricultural exports is a simple penny and a lack of containers needed to move Chinese exports around the world. It is cheaper to take longer to move and unload US agricultural exports, which means less money. Carriers can make a huge profit by sending empty boxes back to China and filling them with Chinese exports. Those boxes can be charged at a higher rate on the trans-Pacific waterway.
Peter Friedman, executive director of the Agriculture Transportation Coalition, said the FMC’s decision to launch an investigation is welcome news for an industry as a trade war has already taken place.
“The rejection of exports could harm the reputation of American industry in being a reliable trading partner,” Friedmann said. “It slows down the release of American exports, and makes them more expensive.”
Freedman pointed out that once an export was rejected, the exporter needed to find alternative routes and ports and pay for additional trucking, chassis rental, storage costs and detention and disposal.
“The FMC announcement is a step in the right direction to fix a broken supply chain system,” Friedman said. “If these exports do not exit, or slow down significantly, it could have an impact on the overall US trade deficit.”
The US trade deficit reached a 14-year high in August. Louis Sola, a commissioner at FMC, said the agency’s investigation into foreign shipping carriers would help protect American exporters.
Sola said, “If we continue to be a country of consumers of imports and neglect to ensure the safety of exporters, the foundation of our economy is like that of ancient Rome.”
The FMC is also investigating penalties that foreign carriers are charging for failure to take cargo at the time of agreeing, known as derage, as well as charges for not returning empty containers within the allotted time Is known as detention in. These punishments are hitting American truck drivers particularly hard.
“This supplemental order, if properly followed by all parties, will detect 98% of incidents of detention and retaliation,” Sola said. “Todd’s enforcement measure will ensure that all parties are acting with good faith.”
The investigation comes under new guidance from the FMC, which examines the surrender and detention practices of sea carriers’ and marine terminal operators to see if they are “justified”. If the carrier is found to be in violation, the FMC may assess civil penalties.
Weston LaBar, CEO of the Harbor Trucking Association, said the logistic community in Southern California paid $ 100 million in penalties this year. HTA has led a coalition seeking to quash these allegations. He argues that carriers have created the right scenario to benefit from inefficiency.
“Carriers are profiting on their restrictions,” LaBar said. “They make rules when you can return or pick up your container as well as refuse that container and charge you to keep it. In any other industry, prohibition is outlawed. Will go. “
LaBar said HTA appreciates the actions of the FMC, but it does not replace lost funds, especially for smaller US importers.
“We have spoken with small US importers, who have wiped out their entire third-quarter profit margins by unfair detention and detention,” LaBar said. He accused the sea carrier of abolishing detention and canceling penalties in the of revenue, instead of using these means to promote a more efficient international shipping system.
“We have the largest consumer economy in the world and it is a privilege to do business here,” said LaBar. “Carriers have no one to blame but themselves. The time has come to fix this broken system and protect American companies and consumers.”