Maritime Shippers Need Short-Term Solution for Port Congestion Issues, Industry Reps Say
The maritime shipping industry is struggling to find a short-term solution to the unprecedented congestion occurring at U.S. ports, which continues to impose large costs on traders and further clog the global supply chain, industry representatives said. Although work is being done by the Federal Maritime Commission and Congress to provide relief, they said many of those efforts will do little to ease port issues in the near future.
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“We still have an immediate problem,” Nate Herman, senior vice president of policy for the American Apparel and Footwear Association, told the Washington International Trade Association during a webinar Feb. 25. “We need people to be reviewing their contracts, [we need to be] getting the Federal Maritime Commission engaged. But all of those take time, and the issue is we have a problem now.”
Dozens of container ships have been waiting outside California ports for weeks, waiting to unload at terminals that are seeing their highest levels of congestion in years (see 2102020050). The ports have also been plagued by a number of other issues (see 2011170041), including equipment shortages, labor shortages and increasing container dwell times: the length of time between a container being unloaded from a ship and it being picked up. Noel Hacegaba, deputy executive director of the Port of Long Beach, said dwell times at the port increased from three days toward the second half of last year to five days in December. “It's in no one's interest to have containers sitting in a container terminal for that long,” he said during the WITA event.
Hacegaba said the port has established an overflow space “to provide immediate relief” and “get those containers out of the terminal as quickly as possible,” adding that “many shippers are already making good use of it.” He also praised the FMC for their work to investigate unfair detention and demurrage fees (see 2011200024) and said he’s optimistic that Congress can also help. As lawmakers are considering emergency funding to relieve port congestion (see 2102090056), Hacegaba said Congress also should fund infrastructure projects to improve the flow of freight across the supply chain and create a “multimodal freight office” that would report to the secretary of transportation on freight movement issues.
“A lot of these solutions that we're talking about are longer term,” Hacegaba said, “but if we put them in place, it will help us better prepare for the situations like the one we're going through now.”
While those ideas may help, they may not do enough to provide immediate relief to industry, said Karyn Booth, a transportation lawyer with Thompson Hine. “There's going to need to be short-term solutions and long-term solutions,” she said. “But my clients are desperate for some short-term solutions.”
While Booth said the FMC has done a “good job” listening to industry concerns about unfair detention and demurrage, including recently issuing information demand orders to ocean carriers and terminal operators about the chargers (see 2102170060), she said that process may take too long. “Frankly, that's a little bit of a longer-term play,” Booth said. “I think there's some folks who would like to see them get more out in front and be more vocal, maybe even hold a hearing on these issues.”
An FMC spokesperson said the commission's ongoing investigation into supply chain disruptions caused by the COVID-19 pandemic (see 2011200024) is addressing both “short term, urgent problems and longer-term port inefficiencies.” Commissioner Rebecca Dye, who is leading the investigation, “is using all appropriate law enforcement tools to address the most immediate problems,” the spokesperson said in a Feb. 25 email. “She is also using Supply Chain Innovation Teams composed of industry leaders to develop commercial solutions to recurring and underlying port challenges.”
While Booth said importers are seeing ocean freight costs “as high as anyone can even remember for decades,” the congestion is also impacting exporters. Exporters are struggling to secure empty containers for shipments, especially to Asia, because high container rates on imports incentivize ocean carriers to “move empties back to China as fast as possible,” she said. And when exporters manage to book a sailing, they are sometimes canceled. “Now they have to wait another two, three, sometimes four weeks to get on another ship,” she said. “This is a complex problem. This is not something that is easy to pinpoint one little link in the chain because of these ripple effects.”
The port issues are complicated by the various contractual relationships between parties in the supply chain, Booth said, adding that some contract terms are being ignored. “When you're in the middle of a crisis, you really don't have time to take somebody to court. You’re trying to get access to your product,” she said. “And so parties are willing to kind of throw the contract out the window, at least initially, to make sure that they can try to get their cargo.”